Working Paper: CEPR ID: DP3244
Authors: Harry Huizinga; Gaetan Nicodeme
Abstract: This Paper examines how international depositors respond to national deposit insurance policies. Countries with explicit deposit insurance are found to be relatively attractive to international non-bank depositors. Schemes characterized by co-insurance, a private administration, and a low deposit insurance premium appear to be particularly favoured by these depositors. The sensitivity of non-bank deposits to deposit insurance policies opens up the possibility of international regulatory competition in this area. The EU directive on deposit insurance imposes minimum standards on national deposit insurance policies. This directive, however, is silent on several important features of deposit insurance such as the level of the deposit insurance premium. Hence, it may not preclude regulatory competition in Europe.
Keywords: Deposit insurance; International deposits
JEL Codes: F34; G18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| explicit deposit insurance (G28) | nonbank external liabilities (F65) |
| explicit deposit insurance (G28) | foreign nonbank deposits (F21) |
| low deposit insurance premium (G52) | international interbank deposits (F33) |
| explicit deposit insurance (G28) | ratio of nonbank to bank deposits (G21) |
| deposit insurance premium (G28) | ratio of nonbank to bank deposits (G21) |