Campus Units

Economics, Finance

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

2015

Journal or Book Title

Journal of Financial Intermediation

Volume

24

Issue

4

First Page or Article ID Number

590

Last Page

601

DOI

10.1016/j.jfi.2015.02.001

Abstract

We investigate the effectiveness of initiating deposit insurance at the outset of a banking crisis. Using a conjoint analysis approach that allows us to consider the simultaneous impact of multiple deposit insurance attributes and various counterfactuals, we ask a multinational sample of respondents how they would view hypothetical account profiles following the failure of a large competing bank. Previous experience matters: respondents from countries without explicit deposit insurance exhibit greater withdrawal risk, suggesting that the introduction of deposit insurance during a crisis may be only partially successful in preventing bank runs. They also impose a higher deposit interest rate premium. Having a long-term bank relationship reduces withdrawal risk, as does the absence of co-insurance.

Comments

NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Financial Intermediation. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Intermediation, [24, 4, (2015)] doi:10.1016/j.jfi.2015.02.001

Copyright Owner

Elsevier Ltd.

Language

en

File Format

application/pdf

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