The Financial Crisis let depositors realized that different levels and forms of deposit protection co-existed in the EU. The objective of this paper is to understand how the main features of the Domestic Guarantee Schemes (DGS) impact on the depositors' confidence on the banking system stability. The analysis of the deposits of 292 European publicly traded banks in the period 2003-2012 in a OLS regression models gave some interesting results. The authors suggest that a pan-EU DGS should have a permanent scheme with a high coverage limit, it should also cover foreign deposits, it should also be administered by a private authority and there should not be risk-adjusted insurance premiums.
Does Deposit Guarantee Scheme increase depositor confidence? An empirical investigation
GIARETTA, ELISA;CHESINI, Giuseppina
2014-01-01
Abstract
The Financial Crisis let depositors realized that different levels and forms of deposit protection co-existed in the EU. The objective of this paper is to understand how the main features of the Domestic Guarantee Schemes (DGS) impact on the depositors' confidence on the banking system stability. The analysis of the deposits of 292 European publicly traded banks in the period 2003-2012 in a OLS regression models gave some interesting results. The authors suggest that a pan-EU DGS should have a permanent scheme with a high coverage limit, it should also cover foreign deposits, it should also be administered by a private authority and there should not be risk-adjusted insurance premiums.
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