Deposit Insurance and Depositor Behavior: Evidence from Colombia

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See all articles by Nicolás de Roux

Nicolás de Roux

Universidad de los Andes - Department of Economics

Nicola Limodio

Bocconi University; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Bocconi University - Baffi Carefin Centre

Date Written: February 17, 2021

Abstract

We exploit a large and unexpected increase in the Colombian insurance threshold to investigate how depositors respond to higher deposit insurance. Monthly depositor-level records from a major bank show that the level and growth rate of deposits rise with higher coverage. Individuals who were fully and nearly-fully insured before the policy drive this increment. A survey of bank customers indicates that higher deposits were replenished by lowering cash and other assets. We estimate an elasticity of deposit growth to deposit insurance of 0.4%, and find a similar figure in the United States by leveraging the 2008 increase in deposit insurance.

Keywords: Banking, Financial Regulation, Household Saving

JEL Classification: G21, G28, G51

Suggested Citation

de Roux, Nicolás and Limodio, Nicola, Deposit Insurance and Depositor Behavior: Evidence from Colombia (February 17, 2021). Documento CEDE No. 5, Available at SSRN: https://ssrn.com/abstract=3787627 or http://dx.doi.org/10.2139/ssrn.3787627

Nicolás De Roux (Contact Author)

Universidad de los Andes - Department of Economics ( email )

Carrera 1a No. 18A-10
Bogota, AA4976
Colombia

Nicola Limodio

Bocconi University ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://www.nicolalimodio.com

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Bocconi University - Baffi Carefin Centre ( email )

Via Roentgen 1
Milan
Italy

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