Fear, deposit insurance schemes, and deposit reallocation in the German banking system

Falko Fecht, Stefan Thum and Patrick Weber

No 12/2019, Discussion Papers from Deutsche Bundesbank

Abstract: Recent regulatory initiatives such as the European Deposit Insurance Scheme propose a change in the coverage and backing of deposit insurances. An assessment of these proposals requires a thorough understanding of what drives depositors' withdrawal decisions. We show that Google searches for 'deposit insurance' and related strings reflect depositors' fears and help to predict deposit shifts in the German banking sector from private banks to fully guaranteed public banks. After the introduction of blanket state guarantees for all deposits in the German banking system this fear driven reallocation of deposits stopped. Our findings highlight that a heterogeneous insurance of deposits can lead to a sudden, fear induced reallocation of deposits endangering the stability of the banking sector even in absence of redenomination risks.

Keywords: Depositor expectations; Google; Deposit insurance; Competition for depositors; Bank runs (search for similar items in EconPapers)
JEL-codes: G01 G10 G20 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eec and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/195583/1/1663479046.pdf (application/pdf)

Related works:
Journal Article: Fear, deposit insurance schemes, and deposit reallocation in the German banking system (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:122019

Access Statistics for this paper

More papers in Discussion Papers from Deutsche Bundesbank Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().