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https://doi.org/10.1080/1331677X.2022.2033130

Deposit insurance, banking stability and banking indicators

Stella Suljić Nikola orcid id orcid.org/0000-0002-0435-4047
Bojana Olgić Draženović
Vesna Buterin


Puni tekst: engleski pdf 1.918 Kb

str. 5632-5649

preuzimanja: 216

citiraj


Sažetak

The deposit insurance system is a form of banking regulation that
protects depositors and provides stability in the banking system.
It is an important part of the financial safety net, especially in
times of economic turmoil, as it provides explicit depositor protection and prevents a ‘bank run’. However, there are some negative effects on banking stability associated with the increase in
bank risk, i.e., moral hazard, adverse selection and the principalagent problem. The functioning of the deposit insurance system
depends on its determinants, but also on the characteristics of
the national banking system, supervision, legal and cultural framework and the general development of the country. Considering
that the banking systems in EU and especially in comparison to
Southeast European countries are very different, the aim of this
paper is to study the impact of the deposit insurance system on
bank stability depending on the characteristics of banks. Bank stability is analysed using bank risk variables: z-score and ratio of
non-performing loans to total loans. By applying a dynamic panel
analysis using the GMM Arellano–Bond (AB) estimator to a sample
of EU countries and selected Southeast European countries, we
provide further evidence on the deposit insurance system over
the period from 2005 to 2014. The results provide evidence that
large and systemically important banks behave in a riskier way,
distorting the purpose of the deposit insurance scheme and jeopardising the safety of banking systems.

Ključne riječi

Banking system; deposit insurance; bank risk; European Union; Southeast European countries; dynamic panel analysis

Hrčak ID:

302864

URI

https://hrcak.srce.hr/302864

Datum izdavanja:

31.3.2023.

Posjeta: 294 *