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Deposit insurance, bank ownership and depositor behavior

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  • Atmaca, Sümeyra
  • Kirschenmann, Karolin
  • Ongena, Steven
  • Schoors, Koen

Abstract

We employ proprietary data from a large bank to analyze how - in times of crisis - depositors react to a bank nationalization, re-privatization and an accompanying increase in deposit insurance. Nationalization slows depositors fleeing the bank, provided they have sufficient trust in the national government, while the increase in deposit insurance spurs depositors below the new 100K limit to deposit more. Prior to nationalization, depositors bunch just below the then-prevailing 20K limit. But they abandon bunching entirely during state-ownership, to return to bunching below the new 100K limit after re-privatization. Especially depositors with low switching costs are moving money around.

Suggested Citation

  • Atmaca, Sümeyra & Kirschenmann, Karolin & Ongena, Steven & Schoors, Koen, 2020. "Deposit insurance, bank ownership and depositor behavior," ZEW Discussion Papers 20-077, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:20077
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    References listed on IDEAS

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    More about this item

    Keywords

    deposit insurance; coverage limit; bank nationalization; depositor heterogeneity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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