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Households' Deposit Insurance Coverage: Evidence and Analysis of Potential Reforms

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  • Kennickell, Arthur B
  • Kwast, Myron L
  • Starr-McCluer, Martha

Abstract

It is often suggested that reducing deposit insurance would reduce problems of moral hazard in the banking industry. However, little is known about likely effects of proposed reforms on household depositors. This study uses data from the Survey of Consumer Finances to examine the characteristics of household depositors, particularly those with uninsured funds. The authors find that large depositors tend to have substantial shares of their assets in insured depositories, yet often fail to keep their holdings within insurance limits. Various explanations for these factors are considered. The authors also simulate the effects of proposed reforms on the pool of uninsured depositors. Copyright 1996 by Ohio State University Press.

Suggested Citation

  • Kennickell, Arthur B & Kwast, Myron L & Starr-McCluer, Martha, 1996. "Households' Deposit Insurance Coverage: Evidence and Analysis of Potential Reforms," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(3), pages 311-322, August.
  • Handle: RePEc:mcb:jmoncb:v:28:y:1996:i:3:p:311-22
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    Cited by:

    1. Birchler, Urs W, 2000. "Bankruptcy Priority for Bank Deposits: A Contract Theoretic Explanation," Review of Financial Studies, Society for Financial Studies, vol. 13(3), pages 813-840.
    2. Bose, Udichibarna & MacDonald, Ronald & Tsoukas, Serafeim, 2015. "Education and the local equity bias around the world," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 39(C), pages 65-88.
    3. Eugene N. White, 1998. "The Legacy of Deposit Insurance: The Growth, Spread, and Cost of Insuring Financial Intermediaries," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 87-122 National Bureau of Economic Research, Inc.
    4. Hallwood, Paul & MacDonald, Ronald, 2014. "Picking the Right Budget Constraint for Scotland," SIRE Discussion Papers 2015-27, Scottish Institute for Research in Economics (SIRE).
    5. Mark Flannery, 1999. "Modernizing Financial Regulation: The Relation Between Interbank Transactions and Supervisory Reform," Journal of Financial Services Research, Springer;Western Finance Association, vol. 16(2), pages 101-116, December.
    6. Bose, Udichibarna & MacDonald, Ronald & Tsoukas, Serafeim, 2014. "The role of education in equity portfolios during the recent financial crisis," SIRE Discussion Papers 2015-26, Scottish Institute for Research in Economics (SIRE).
    7. Shizuka Sekita, 2005. "Does Depositors' Discipline by Households Exist? (in Japanese)," Discussion Papers in Economics and Business 05-10, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    8. repec:kap:jfsres:v:53:y:2018:i:1:d:10.1007_s10693-016-0261-2 is not listed on IDEAS
    9. Bose, Udichibarna & MacDonald, Ronald & Tsoukas, Serafeim, 2015. "Education and the local equity bias around the world," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-76, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Bose, Udichibarna & MacDonald, Ronald & Tsoukas, Serafeim, 2014. "The role of education in equity portfolios during the recent financial crisis," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-26, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Arthur B. Kennickell & Myron L. Kwast, 1997. "Who uses electronic banking?," Finance and Economics Discussion Series 1997-35, Board of Governors of the Federal Reserve System (U.S.).

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