Deposit Insurance, Bank Ownership and Depositor Behavior

Atmaca, Sumeyra; Kirschenmann, Karolin; Ongena, Steven; Schoors, Koen J. L.

doi:10.2139/ssrn.3766016

Deposit Insurance, Bank Ownership and Depositor Behavior

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

46 Pages Posted: 15 Jan 2021

See all articles by Sumeyra Atmaca

Karolin Kirschenmann

ZEW – Leibniz Centre for European Economic Research

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; 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

There 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: 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, Available at SSRN: https://ssrn.com/abstract=3766016 or http://dx.doi.org/10.2139/ssrn.3766016