Flight from safety: how a change to the deposit insurance limit affects households' portfolio allocation

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Bibliographic Details
Authors and Corporations:	Damar, Evren (Author), Gropp, Reint (Author), Mordel, Adi (Author)
Other Authors:	Gropp, Reint 1966- [Author] • Mordel, Adi [Author]
Type of Resource:	E-Book
Language:	English
published:	[Ottawa] Bank of Canada [2019]
Series:	Bank of Canada: Staff working paper ; 2019, 29 (August 2019)
Subjects:	Financial institutions Financial system regulation and policies Graue Literatur
Source:	Verbunddaten SWB Lizenzfreie Online-Ressourcen

Description
Summary:	We study how an increase to the deposit insurance limit affects households' portfolio allocation by exogenously increasing the share of safe financial assets. Using unique data that identify 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 deposits in the banking system. 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 non-trivial adjustments to household portfolios.
Physical Description:	1 Online-Ressource (circa 52 Seiten); Illustrationen