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Financial inclusion for financial stability : access to bank deposits and the growth of deposits in the Global Financial Crisis

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  • Han, Rui
  • Melecky, Martin

Abstract

In crisis times, depositors get anxious, can run on banks, and withdraw their deposits. Correlated withdrawals of bank deposits could be mitigated if bank deposits are more diversified, that is, held by more individuals. This paper examines the link between the broader access to bank deposits prior to the 2008 crisis and the dynamics of bank deposit growth during the crisis, while controlling for relevant covariates. Employing proxies for access to deposits and the use of bank deposits, the authors find that greater access to bank deposits can make the deposit funding base of banks more resilient in times of financial stress. Policy efforts to enhance financial stability should thus not only focus on macroprudential regulation, but also recognize the positive effect of broader access to bank deposits on financial stability.

Suggested Citation

  • Han, Rui & Melecky, Martin, 2013. "Financial inclusion for financial stability : access to bank deposits and the growth of deposits in the Global Financial Crisis," Policy Research Working Paper Series 6577, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6577
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    References listed on IDEAS

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    1. Huang, Rocco & Ratnovski, Lev, 2011. "The dark side of bank wholesale funding," Journal of Financial Intermediation, Elsevier, vol. 20(2), pages 248-263, April.
    2. Eswar S. Prasad, 2010. "Financial Sector Regulation and Reforms in Emerging Markets: An Overview," NBER Working Papers 16428, National Bureau of Economic Research, Inc.
    3. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, pages 14-23.
    4. Buncic, Daniel & Melecky, Martin, 2014. "Equilibrium credit: The reference point for macroprudential supervisors," Journal of Banking & Finance, Elsevier, vol. 41(C), pages 135-154.
    5. Anginer, Deniz & Demirguc-Kunt, Asli & Zhu, Min, 2012. "How does bank competition affect systemic stability ?," Policy Research Working Paper Series 5981, The World Bank.
    6. Demombynes, Gabriel & Thegeya, Aaron, 2012. "Kenya's mobile revolution and the promise of mobile savings," Policy Research Working Paper Series 5988, The World Bank.
    7. Hyun Song Shin, 2009. "Reflections on Northern Rock: The Bank Run That Heralded the Global Financial Crisis," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 101-119, Winter.
    8. Honohan, Patrick, 2008. "Cross-country variation in household access to financial services," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2493-2500, November.
    9. Demirguc-Kunt, Asli & Karacaovali, Baybars & Laeven, Luc, 2005. "Deposit insurance around the world : a comprehensive database," Policy Research Working Paper Series 3628, The World Bank.
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    Citations

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    Cited by:

    1. Zuzana FUNGACOVA & Iftekhar HASAN & Laurent WEILL, 2016. "Trust in banks," Working Papers of LaRGE Research Center 2016-09, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    2. Maimbo, Samuel Munzele & Melecky, Martin, 2014. "Financial sector policy in practice : benchmarking financial sector strategies around the world," Policy Research Working Paper Series 6746, The World Bank.
    3. Fungáčová, Zuzana & Weill, Laurent, 2015. "Understanding financial inclusion in China," China Economic Review, Elsevier, vol. 34(C), pages 196-206.
    4. Beck, Thorsten & De Jonghe, Olivier, 2013. "Lending concentration, bank performance and systemic risk : exploring cross-country variation," Policy Research Working Paper Series 6604, The World Bank.
    5. Sonia Di Giannatale & María José Roa, 2016. "Formal Saving in Developing Economies: Barriers, Interventions, and Effects," IDB Publications (Working Papers) 8107, Inter-American Development Bank.
    6. Sonia Di Giannatale & María José Roa, 2016. "Formal Saving in Developing Economies: Barriers, Interventions, and Effects," IDB Publications (Working Papers) 97397, Inter-American Development Bank.
    7. Han, Rui & Melecky, Martin, 2017. "Broader use of saving products among people can make deposit funding of the banking system more resilient," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 47(C), pages 89-102.

    More about this item

    Keywords

    Debt Markets; Banks&Banking Reform; Access to Finance; Deposit Insurance; Emerging Markets;

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