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Deposit Insurance, Bank Ownership and Depositor Behavior

ZEW - Centre for European Economic Research Discussion Paper No. 20-077

Swiss Finance Institute Research Paper No. 21-56

48 Pages Posted: 15 Jan 2021 Last revised: 10 Aug 2021

See all articles by Sumeyra Atmaca

Sumeyra Atmaca

Ghent University

Karolin Kirschenmann

ZEW – Leibniz Centre for European Economic Research

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Koen J. L. Schoors

Ghent University - Centre for Russian International Socio-Political and Economic Studies (CERISE); Ghent University - Department of General Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2020

Abstract

We employ proprietary data from a large bank to analyze how – in times of crisis – depositors react to a bank nationalization, re-privatization and an accompanying increase in deposit insurance. Nationalization slows depositors fleeing the bank, provided they have sufficient trust in the national government, while the increase in deposit insurance spurs depositors below the new 100K limit to deposit more. Prior to nationalization, depositors bunch just below the then-prevailing 20K limit. But they abandon bunching entirely during state-ownership, to return to bunching below the new 100K limit after re-privatization. Especially depositors with low switching costs are moving money around.

Keywords: deposit insurance; coverage limit; bank nationalization; depositor heterogeneity

JEL Classification: G21, G28, H13, N23

Suggested Citation

Atmaca, Sumeyra and Kirschenmann, Karolin and Ongena, Steven R. G. and Schoors, Koen J. L., Deposit Insurance, Bank Ownership and Depositor Behavior (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-077, Swiss Finance Institute Research Paper No. 21-56, Available at SSRN: https://ssrn.com/abstract=3766016 or http://dx.doi.org/10.2139/ssrn.3766016

Sumeyra Atmaca (Contact Author)

Ghent University ( email )

Coupure Links 653
Gent, 9000
Belgium

Karolin Kirschenmann

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 71
D-68034 Mannheim, 68034
Germany

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Koen J. L. Schoors

Ghent University - Centre for Russian International Socio-Political and Economic Studies (CERISE) ( email )

Tweekerkenstraat 2
Ghent, 9000
Belgium
+32 9 264 34 78 (Phone)
+32 9 265 35 99 (Fax)

Ghent University - Department of General Economics ( email )

Tweekerkenstraat 2
Ghent, 9000
Belgium
+32 9 264 34 78 (Phone)
+32 9 264 35 99 (Fax)

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