Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/202030
Authors: 
Damar, H. Evren
Gropp, Reint E.
Mordel, Adi
Year of Publication: 
2019
Series/Report no.: 
IWH Discussion Papers 19/2019
Abstract: 
We study how an increase to the deposit insurance limit affects households' portfolio allocation by exogenously reducing uninsured deposit balances. Using unique data that identifies insured versus uninsured deposits, along with detailed information on Canadian households' portfolio holdings, we show that households respond by drawing down deposits and shifting towards mutual funds and stocks. These outflows amount to 2.8% of outstanding bank deposits. The empirical evidence, consistent with a standard portfolio choice model that is modified to accommodate uninsured deposits, indicates that more generous deposit insurance coverage results in nontrivial adjustments to household portfolios.
Subjects: 
deposit insurance
banking
households
regulation
JEL: 
D14
G21
G28
L51
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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