Working Paper: CEPR ID: DP15547
Authors: Sumeyra Atmaca; Karolin Kirschenmann; Steven Ongena; Koen Schoors
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.
Keywords: deposit insurance; coverage limit; bank nationalization; depositor heterogeneity
JEL Codes: G21; G28; H13; N23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| nationalization (H13) | deposit growth (G21) |
| trust in national government (H63) | deposit growth (G21) |
| increase in deposit insurance coverage (G28) | deposit growth (G21) |
| bunching behavior below the 20k limit (C92) | deposit behavior (G21) |
| switching costs (D23) | deposit behavior (G21) |
| trust in national government (H63) | calming effect of nationalization (F52) |