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The Travels Of A Bank Deposit In Turbulent Times: The Importance Of Deposit Insurance Design For Cross‐Border Deposits

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  • Shusen Qi
  • Stefanie Kleimeier
  • Harald Sander

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 F34, G18)

Suggested Citation

  • Shusen Qi & Stefanie Kleimeier & Harald Sander, 2020. "The Travels Of A Bank Deposit In Turbulent Times: The Importance Of Deposit Insurance Design For Cross‐Border Deposits," Economic Inquiry, Western Economic Association International, vol. 58(2), pages 980-997, April.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:2:p:980-997
    DOI: 10.1111/ecin.12845
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    Cited by:

    1. Boyle, Glenn & Stover, Roger & Tiwana, Amrit & Zhylyevskyy, Oleksandr, 2022. "Depositor responses to a banking crisis: Are finance professionals special?," Journal of Empirical Finance, Elsevier, vol. 67(C), pages 182-195.
    2. Yan, Yu & Qi, Shusen, 2021. "Childhood matters: Family education and financial inclusion," Pacific-Basin Finance Journal, Elsevier, vol. 65(C).
    3. Kleimeier, Stefanie & Sander, Harald, 2022. "Twenty years with the Euro: Eurozone banking market integration revisited," Economic Modelling, Elsevier, vol. 114(C).

    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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