Deposit insurance, crisis, and risk taking in ASEAN banks

Viverita, Arum Ismitastutib

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This study tests the role of deposit insurance on banks' risk-taking behaviour and systemic risk in five ASEAN countries during the 2007-2008 crisis period. After controlling banks' specific and macroeconomic factors, this study reveals that the presence of such a guarantee significantly reduces banks' risk-taking and banks' systemic risk in the region. The study also uncovers the negative effect of crisis on banking stability; it appears that when the guarantee is applied during the crisis period, it reduces banks' systemic risk. The findings of this study are consistent with the objective of implementing a deposit insurance system in banks as a means to avoid bank runs and to protect banks from systemic risk, especially during economic downturns. Such a policy can help to decrease bank risk whilst increasing bank stability.

Original languageEnglish
Pages (from-to)207-221
Number of pages15
JournalInternational Journal of Economics and Management
Volume11
Issue numberSpecialIssue1
Publication statusPublished - 1 Jan 2017

Keywords

  • ASEAN-5
  • Bank risk taking
  • Banking stability
  • Deposit insurance

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