The Travels of a Bank Deposit in Turbulent Times: The Importance of Deposit Insurance Design for Cross‐Border Deposits

18 Pages Posted: 14 May 2020

See all articles by Shusen Qi

Shusen Qi

Xiamen University - School of Management

Stefanie Kleimeier

Maastricht University - Department of Finance; Open Universiteit; Univ. of Stellenbosch Business School

Harald Sander

University of Applied Sciences Cologne

Date Written: April 2020

Abstract

We examine the impact of the existence on an explicit deposit insurance (DI) scheme and its design features on bilateral cross‐border deposits (CBD) in a gravity model setting. We find that both the absolute quality of a country's DI and its relative quality vis‐à‐vis other countries' DI generally affect depositor behavior. However, during systemic banking crises, cross‐border depositors primarily seek countries with the best DI schemes. Similarly, during the 2008–2009 great financial crisis, the emergency actions taken by the governments, which supply and maintain these safe havens, have led to substantial relocations of CBD.

JEL Classification: F34, G18

Suggested Citation

Qi, Shusen and Kleimeier, Stefanie and Sander, Harald, The Travels of a Bank Deposit in Turbulent Times: The Importance of Deposit Insurance Design for Cross‐Border Deposits (April 2020). Economic Inquiry, Vol. 58, Issue 2, pp. 980-997, 2020, Available at SSRN: https://ssrn.com/abstract=3596441 or http://dx.doi.org/10.1111/ecin.12845

Shusen Qi (Contact Author)

Xiamen University - School of Management ( email )

No.422 Siming South Road
Xiamen, Fujian 361005
China

Stefanie Kleimeier

Maastricht University - Department of Finance ( email )

Maastricht, 6200 MD
Netherlands

Open Universiteit

Valkenburgerweg 177
Heerlen, 6419 AT
Netherlands

Univ. of Stellenbosch Business School

Carl Cronjé Drive
CAPE TOWN, Cape Town 7535
South Africa

Harald Sander

University of Applied Sciences Cologne ( email )

Claudiusstrrasse 1
50678 Cologne
Germany
+49 221 82753419 (Phone)
+49 221 82753131 (Fax)

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