COVID-19 pandemic and explicit deposit insurance scheme: an analytical study

The current study aims to evaluate the effectiveness of implementing an explicit deposit insurance (EDI) mechanism in maintaining the stability of the banking industry and regaining depositor confidence in Egyptian banks during the COVID-19 outbreak. Based on a review of the literature, the study created a questionnaire to test four hypotheses about the banking system's ability to meet the requirements for implementing the EDI system, as well as the expected effects of EDI on depositor confidence, deposit stability, and banking credit flexibility. The questionnaire was distributed to 130 commercial bank branches located in the four largest governorates in Egypt. The survey was conducted from July 2020 to January 2021. The findings of the study show that the Egyptian economy meets the requirements for implementing EDI. As a result, implementing this program will shield Egyptian banks from internal and external financial volatility, stabilise deposit volume, and encourage the saving of more cash as a result of growing public confidence in the banking system. Consequently, the paper recommends how to implement the EDI system, which could be helpful to Egyptian decision-makers when they do so.