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Bank Time Deposit Rates and Market Discipline in Poland: The Impact of State Ownership and Deposit Insurance Reform

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  • Thomas Mondschean
  • Timothy Opiela

Abstract

This paper examines the impact of ownership structure and changes in the deposit insurance system on the market for bank time deposits in Poland. In an environment of less restrictive bank supervision and a deposit insurance policy that favored state banks, we find depositors exacted a price for risk taking. After a new law increasing coverage for private banks went into effect, however, bank specific variables became less important in explaining differences in deposit interest rates. We report that the three fully guaranteed state banks pay significantly lower rates that private banks. However, other state-owned banks, with the same de jure guarantee as private banks, pay significantly lower rates than private banks, so it appears that depositors treat these state-owned banks as if they have a larger de facto guarantee.
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  • Thomas Mondschean & Timothy Opiela, 1999. "Bank Time Deposit Rates and Market Discipline in Poland: The Impact of State Ownership and Deposit Insurance Reform," Journal of Financial Services Research, Springer;Western Finance Association, vol. 15(3), pages 179-196, May.
    • Handle: RePEc:kap:jfsres:v:15:y:1999:i:3:p:179-196
    DOI: 10.1023/A:1008140716508
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