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The Impact of Deposit Insurance on Depositor Behavior During a Crisis: A Conjoint Analysis Approach

Author

Listed:
  • Boyle, Glenn
  • Stover, Roger
  • Tiwana, Amrit
  • Zhylyevskyy, Oleksandr
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.

Suggested Citation

  • Boyle, Glenn & Stover, Roger & Tiwana, Amrit & Zhylyevskyy, Oleksandr, 2015. "The Impact of Deposit Insurance on Depositor Behavior During a Crisis: A Conjoint Analysis Approach," Staff General Research Papers Archive 38656, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:38656
    DOI: 10.1016/j.jfi.2015.02.001
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    References listed on IDEAS

    as
    1. Ms. G. G. Garcia, 2000. "Deposit Insurance: Actual and Good Practices," IMF Occasional Papers 2000/001, International Monetary Fund.
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    More about this item

    Keywords

    banking crises; Conjoint analysis; deposit insurance; bank runs;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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