Deposit Insurance and Cross-Border Deposits in Times of Banking Crises: recent published paper


Dr. Harald Sander, Professor of Economics at MSM and Professor of Economics and International Economics at Technische Hochschule Köln – University of applied Sciences, recently published a paper titled: Deposit Insurance and Cross-Border Deposits in Times of Banking Crises. The aim of this publication is to show the effects of deposit insurance on global deposit flows and to inform policy makers on how to make global, regional and national financial systems more stable which has become even more important after the financial crisis in 2008/2009.

Deposit insurance systems are a common feature of the financial systems of most countries. Their rationale is twofold: to protect bank depositors in case of a bankruptcy and – even more importantly – to avoid widespread bankruptcies as a consequence of bank runs in the first place. However, in times of globally mobile capital, customers might look for safe(r) havens for their deposits abroad, especially when countries are experiencing a financial crisis. This can lead to a global competition for providing the best safety and, hence, destabilize the financial system of a crisis country even further. “We show that there is a strong case for global and regional coordination. Our study therefore also lends support for establishing a common European Deposit Insurance System (EDIS) to make the Euro area more resilient to future crisis,” Dr. Sander explains.

Heatmap of the Existence of a Deposit Insurance System in 2006 before the Great Financial Crisis

When asked how the results of this publication feed back into his work as Professor of Economics at MSM, Dr. Harald Sander replied: “Globalization and its consequences for nations, corporations and people are key areas in MSM’s mission. Thus, stimulating research in these areas is very important, especially because MSM is engaged in consulting and education projects in emerging economies where growth and development is often constrained by underdeveloped and badly regulated financial systems”.

Co-authors of the publication “Deposit Insurance and Cross-Border Deposits in Times of Banking Crises” are:
Stefanie Kleimeier
Associate Professor of Finance at Maastricht University (NL)
Professor of Entrepreneurial Finance and Banking at the Open Universiteit in Heerlen (NL) Professor Extraordinary at the University of Stellenbosch Business School (South Africa)
Shusen Qi
Assistant Professor of Finance at Xiamen University in Xiamen (China)

Interested and want to know more? On 30 June 2019, Dr. Sander will be present at the Annual International Conference on Macroeconomic Analysis and International Finance in Crete to present a research paper on this subject. To read the full publication please click here.

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