THE TRAVELS OF A BANK DEPOSIT IN TURBULENT TIMES: THE IMPORTANCE OF DEPOSIT INSURANCE DESIGN FOR CROSS-BORDER DEPOSITS

Shusen Qi; Stefanie Kleimeier; Harald Sander

doi:10.1111/ecin.12845

THE TRAVELS OF A BANK DEPOSIT IN TURBULENT TIMES: THE IMPORTANCE OF DEPOSIT INSURANCE DESIGN FOR CROSS-BORDER DEPOSITS

Shusen Qi^*, Stefanie Kleimeier, Harald Sander

^*Corresponding author for this work

Finance

Research output: Contribution to journal › Article › Academic › peer-review

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-a-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 F34, G18)

Original language	English
Pages (from-to)	980-997
Number of pages	18
Journal	Economic Inquiry
Volume	58
Issue number	2
Early online date	29 Sept 2019
DOIs	https://doi.org/10.1111/ecin.12845
Publication status	Published - Apr 2020

JEL classifications

f34 - International Lending and Debt Problems
g18 - General Financial Markets: Government Policy and Regulation

Keywords

deposit insurance
cross-border deposits
banking crisis

Access to Document

10.1111/ecin.12845Licence: CC BY

Cite this

@article{16d25429b92a49a7acbe8feabfdea06f,

title = "THE TRAVELS OF A BANK DEPOSIT IN TURBULENT TIMES: THE IMPORTANCE OF DEPOSIT INSURANCE DESIGN FOR CROSS-BORDER DEPOSITS",

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-a-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 F34, G18)",

keywords = "deposit insurance, cross-border deposits, banking crisis",

author = "Shusen Qi and Stefanie Kleimeier and Harald Sander",

note = "data source:BIS: International Banking Statistics; World Bank: Worldwide Governance Indicators Database; World Bank: Bank Regulation and Supervision Surveys; World Bank: Deposit Insurance Database; World Bank: Global Financial Development Database; World Bank: World Development Indicators Database; IMF: Systemic Banking Crises Database; IMF: International Financial Statistics; UN: World Telecommunication/ITC Indicators Data; OECD: STAN Bilateral Trade Database; KOF Swiss Economic Institute: KOF Index of Globalization; data provided on Andrew Rose's website at http://faculty.haas.berkeley.edu/arose/ ; data provided on Hiro Ito's website at http://web.pdx.edu/~ito/ ; data provided on L. Eden{\textquoteright}s website at http://www.chemical-ecology.net/java/capitals.htm ; ",

year = "2020",

month = apr,

doi = "10.1111/ecin.12845",

language = "English",

volume = "58",

pages = "980--997",

journal = "Economic Inquiry",

issn = "0095-2583",

publisher = "Wiley",

number = "2",

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T1 - THE TRAVELS OF A BANK DEPOSIT IN TURBULENT TIMES

T2 - THE IMPORTANCE OF DEPOSIT INSURANCE DESIGN FOR CROSS-BORDER DEPOSITS

AU - Qi, Shusen

AU - Kleimeier, Stefanie

AU - Sander, Harald

N1 - data source:BIS: International Banking Statistics; World Bank: Worldwide Governance Indicators Database; World Bank: Bank Regulation and Supervision Surveys; World Bank: Deposit Insurance Database; World Bank: Global Financial Development Database; World Bank: World Development Indicators Database; IMF: Systemic Banking Crises Database; IMF: International Financial Statistics; UN: World Telecommunication/ITC Indicators Data; OECD: STAN Bilateral Trade Database; KOF Swiss Economic Institute: KOF Index of Globalization; data provided on Andrew Rose's website at http://faculty.haas.berkeley.edu/arose/ ; data provided on Hiro Ito's website at http://web.pdx.edu/~ito/ ; data provided on L. Eden’s website at http://www.chemical-ecology.net/java/capitals.htm ;

PY - 2020/4

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N2 - 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-a-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 F34, G18)

AB - 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-a-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 F34, G18)

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KW - banking crisis

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