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EFFECTS OF DEPOSIT INSURANCE SYSTEM ON BANKS’ RISK TAKING INCENTIVES IN TURKEY

Yıl 2014, Cilt: 3 Sayı: 4, 0 - 0, 08.11.2015

Gamze Gocmen Yagcilar

Öz

 Deposit insurance is an insurance system that guarantees bank deposits of people in case of bank failure or a run on the bank. Deposit insurance in Turkey is handled by Savings Deposit Fund Insurance and according to the latest regulations compensation limit covers a maximum of 100,000 TL per depositor per member institution. The system is adopted in most countries and has various advantages for both individuals and banks. However academic debates commonly focus on whether this system encourages banks to take excessive risks. In this context the purpose of this study is to analyze the link between deposit insurance and banks’ risk taking. For this purpose, a panel regression analysis is applied to the ratio of deposits under insurance to total deposits and basic risk measures of banks operating in Turkey during 2002Q4-2013Q1. Results suggest that, higher insured deposit ratios are related to higher credit risk and interest rate risk but lower liquidity risk and overall default risk.

Anahtar Kelimeler

Deposit insurance banks’ risk taking panel data regression

Kaynakça

  • Abdullah, S.A.S. and R. Ahmad, (2012), “Deposit Insurance System: An Exposition
  • for the Islamic Banks in Malaysia”, International Journal of Social Sciences and
  • Humanity Studies, Vol. 4, No. 2, pp. 427-439. 
  • Angkinand, Apanard, C. and Wihlborg, (2010), “Deposit Insurance Coverage,
  • Ownership and Banks’ Risk Taking in Emerging Markets”, Journal of International
  • Money and Finance, Vol. 29, 252-274. 
  • Anginer, D, Demirgüç-Kunt, A. and Zhu, M. (2014), “How Does Deposit Insurance
  • Affect Bank Risk? Evidence from the Recent Crisis”, Journal of Banking and
  • Finance, http://dx.doi.org/10.1016/j.jbankfin.2013.09.013. 
  • Aydin, N., Başar M. and Coşkun, M., (2006), Bankacılık Uygulamaları, Anadolu
  • Üniversitesi Ya. No. 1711, Eskişehir. 
  • Bartholdy, Jan, Glenn W. Boyle and R.D. Stover, (2003), “Deposit Insurance and
  • the Risk Premium in Bank Deposit Rates”, Journal of Banking and Finance, Vol. 27, 699-717. 
  • Batisse, C., (2001), “Externalities and Local Growth: A Panel Data Analysis Applied
  • to Chinese Provinces”, International Conference of the Chinese Economy, Has
  • China Become a Market Economy?, May 17-18 2001, France. 
  • Beck, T., (2008), “Bank Competition and Financial Stability: Friends or Foes?”,
  • World Bank Policy Reseach Working Paper, No. 4656, pp. 1-30. 
  • Bossone, B., (2000), “What Makes Banks Special? A Study of Banking, Finance and
  • Economic Development”, World Bank Working Papers, No. 2408, pp.1-66. 
  • Boyd, J.H and De Nicola, G, (2008), “The Theory of Bank Risk Taking and
  • Competition Revisited”, the Journal of Finance, Vol. 60, No. 3, 1329-1343.
  • Buttonwood’s Notebook, “Eurozone Crisis: What Does a Guarantee Mean?”, The
  • Economist, Mar 19th, 2013,
  • www.economist.com/blogs/buttonwood/2013/03/euro-zone-crisis-1 
  • Carapella, F. and G. Di Giorgio, (2004), “Deposit Insurance, Institutions and Bank
  • Interest Rates”, Transition Studies Review, Vol. 11, no. 3, 77-92. 
  • DeLong, G. and Sauncers, A. (2011), “Did The Introduction Of Fixed-Rate Federal
  • Deposit Insurance Increase Long-Term Bank Risk-Taking?”, Journal of Financial
  • Stability, Vol. 7, pp. 19-25. 
  • Demirgüç-Kunt, A. and E. Detragiache, (1999), “Does Deposit Insurance Increase
  • Banking System Stability? An Empirical Investigation”, World Bank Policy
  • Research Working Paper, No. 2247. 
  • Diamond, D.W. and P.H. Dybvig, (1983), “Bank Runs, Deposit Insurance and
  • Liquidity”, Journal of Political Economy, Vol. 91, No. 3, pp. 401-419. 
  • Enkhbold, E. and Otgonshar, B., (2013), “The Effect of Deposit Insurance on Risk
  • Taking in Asian Banks”, Asian Journal of Finance & Accounting, Vol. 5, No. 1, pp. 104-126.
  • Gonzalez, F., (2005), “Bank Regulation and Risk-Taking Incentives: An
  • International Comparison of Bank Risk”, Journal of Banking & Finance, Vol. 29, pp. 1153-1184. 
  • Gropp, R. and Vesela, J. (2004), “Deposit Insurance, Moral Hazard and Market
  • Monitoring”, European Central Bank, Working Paper Series, No. 302. 
  • Gueyie, J.P. and Lai, V.S. (2003), “ Bank Moral Hazard and the Introduction of
  • Official Deposit Insurance in Canada”, International Review of Economics and
  • Finance, Vol. 12, pp. 247-273. 
  • Huang, D.F. (2005), “The Predictive Power of Capital Adequacy Ratios on Bank
  • Risk”, Journal of Contemporary Accounting, Vol. 6, no. 1, pp. 1-22,
  • http://www2.tku.edu.tw/~tmax/file/account_72/v6n1-1.pdf. 
  • Ioannidou, V.P. and Penas, M.F. (2010), “Deposit Insurance and Bank Risk Taking:
  • Evidence from Internal Loan Ratings”, Journal of Financial Intermediation, Vol. 19, 95-115. 
  • Keeley, M.C., (1990), “Deposit Insurance, Risk and Market Power in Banking”, The
  • American Economic Review, Vol. 80, No. 5, 1183-1200.
  • Le, M. (2013), “Deposit Insurance Adoption and Bank Risk-Taking: the Role of
  • Leverage”, Paris School of Economics, Working Papers, No. 2013-41. 
  • Leaven, L. (2002), “Bank Risk and Deposit Insurance”, The World Bank Economic
  • Review, Vol. 16, No. 1, pp. 109-137. 
  • Leaven, L. and Levine, R. (2008), “Bank Governance, Regulation and Risk Taking”,
  • NBER Working Paper Series, No: 14113. 
  • Ng, T.H., Lim, Y.S. and Tan N. L., (2010), “Deposit Insurance and Bank Risks: The
  • Case of Malaysia”, European Journal of Economics, Finance and Administrative
  • Sciences, Issue 18, 19-27.
  • Ninimaki, J-P. (2000), “The Effects of Competition on Banks’ Risk Taking with and
  • without Deposit Insurance”, Bank of Finland Discussion Papers, No. 21. 
  • Pennacchi, G. (2006), “Deposit Insurance, Bank Regulation and financial System
  • Risks”, Journal of Monetary Economics, Vol. 53, pp. 1-30. 
  • Silva, N. (2008), “Deposit Insurance, Moral Hazard and The Risk of Runs”, Central
  • Bank of Chile Working Papers No. 478.
  • Şıklar, İ. (2004), Finansal Ekonomi, Anadolu Üniversitesi Ya., No. 1588, Eskişehir. 
  • Yoon, K.H. and Jun, Y.S. (2012), “Deposit Insurance Increase and Risk Taking by
  • Banks”, International Research Journal of Finance and Economics, Issue 91. 
  • Wheelock, D.C. and Wilson, P.W. (1994), “Can Deposit Insurance Increase the Risk
  • of Bank Failure? Some Historical Evidence”, Federal Reserve Bank of St.Louis
  • Review, Vol. 76, No. 3, May/June 1994, pp. 57-71. 
  • Wu, R-J, and Chi, C-P, (2006), “Competition, Deposit Insurance and Bank Risk
  • Taking”, http://centerforpbbefr.rutgers.edu/2006/Paper%202006/16AS02-056
  • Chien-Ping%20Chi.pdf.

Yıl 2014, Cilt: 3 Sayı: 4, 0 - 0, 08.11.2015

Gamze Gocmen Yagcilar

Öz

Kaynakça

  • Abdullah, S.A.S. and R. Ahmad, (2012), “Deposit Insurance System: An Exposition
  • for the Islamic Banks in Malaysia”, International Journal of Social Sciences and
  • Humanity Studies, Vol. 4, No. 2, pp. 427-439. 
  • Angkinand, Apanard, C. and Wihlborg, (2010), “Deposit Insurance Coverage,
  • Ownership and Banks’ Risk Taking in Emerging Markets”, Journal of International
  • Money and Finance, Vol. 29, 252-274. 
  • Anginer, D, Demirgüç-Kunt, A. and Zhu, M. (2014), “How Does Deposit Insurance
  • Affect Bank Risk? Evidence from the Recent Crisis”, Journal of Banking and
  • Finance, http://dx.doi.org/10.1016/j.jbankfin.2013.09.013. 
  • Aydin, N., Başar M. and Coşkun, M., (2006), Bankacılık Uygulamaları, Anadolu
  • Üniversitesi Ya. No. 1711, Eskişehir. 
  • Bartholdy, Jan, Glenn W. Boyle and R.D. Stover, (2003), “Deposit Insurance and
  • the Risk Premium in Bank Deposit Rates”, Journal of Banking and Finance, Vol. 27, 699-717. 
  • Batisse, C., (2001), “Externalities and Local Growth: A Panel Data Analysis Applied
  • to Chinese Provinces”, International Conference of the Chinese Economy, Has
  • China Become a Market Economy?, May 17-18 2001, France. 
  • Beck, T., (2008), “Bank Competition and Financial Stability: Friends or Foes?”,
  • World Bank Policy Reseach Working Paper, No. 4656, pp. 1-30. 
  • Bossone, B., (2000), “What Makes Banks Special? A Study of Banking, Finance and
  • Economic Development”, World Bank Working Papers, No. 2408, pp.1-66. 
  • Boyd, J.H and De Nicola, G, (2008), “The Theory of Bank Risk Taking and
  • Competition Revisited”, the Journal of Finance, Vol. 60, No. 3, 1329-1343.
  • Buttonwood’s Notebook, “Eurozone Crisis: What Does a Guarantee Mean?”, The
  • Economist, Mar 19th, 2013,
  • www.economist.com/blogs/buttonwood/2013/03/euro-zone-crisis-1 
  • Carapella, F. and G. Di Giorgio, (2004), “Deposit Insurance, Institutions and Bank
  • Interest Rates”, Transition Studies Review, Vol. 11, no. 3, 77-92. 
  • DeLong, G. and Sauncers, A. (2011), “Did The Introduction Of Fixed-Rate Federal
  • Deposit Insurance Increase Long-Term Bank Risk-Taking?”, Journal of Financial
  • Stability, Vol. 7, pp. 19-25. 
  • Demirgüç-Kunt, A. and E. Detragiache, (1999), “Does Deposit Insurance Increase
  • Banking System Stability? An Empirical Investigation”, World Bank Policy
  • Research Working Paper, No. 2247. 
  • Diamond, D.W. and P.H. Dybvig, (1983), “Bank Runs, Deposit Insurance and
  • Liquidity”, Journal of Political Economy, Vol. 91, No. 3, pp. 401-419. 
  • Enkhbold, E. and Otgonshar, B., (2013), “The Effect of Deposit Insurance on Risk
  • Taking in Asian Banks”, Asian Journal of Finance & Accounting, Vol. 5, No. 1, pp. 104-126.
  • Gonzalez, F., (2005), “Bank Regulation and Risk-Taking Incentives: An
  • International Comparison of Bank Risk”, Journal of Banking & Finance, Vol. 29, pp. 1153-1184. 
  • Gropp, R. and Vesela, J. (2004), “Deposit Insurance, Moral Hazard and Market
  • Monitoring”, European Central Bank, Working Paper Series, No. 302. 
  • Gueyie, J.P. and Lai, V.S. (2003), “ Bank Moral Hazard and the Introduction of
  • Official Deposit Insurance in Canada”, International Review of Economics and
  • Finance, Vol. 12, pp. 247-273. 
  • Huang, D.F. (2005), “The Predictive Power of Capital Adequacy Ratios on Bank
  • Risk”, Journal of Contemporary Accounting, Vol. 6, no. 1, pp. 1-22,
  • http://www2.tku.edu.tw/~tmax/file/account_72/v6n1-1.pdf. 
  • Ioannidou, V.P. and Penas, M.F. (2010), “Deposit Insurance and Bank Risk Taking:
  • Evidence from Internal Loan Ratings”, Journal of Financial Intermediation, Vol. 19, 95-115. 
  • Keeley, M.C., (1990), “Deposit Insurance, Risk and Market Power in Banking”, The
  • American Economic Review, Vol. 80, No. 5, 1183-1200.
  • Le, M. (2013), “Deposit Insurance Adoption and Bank Risk-Taking: the Role of
  • Leverage”, Paris School of Economics, Working Papers, No. 2013-41. 
  • Leaven, L. (2002), “Bank Risk and Deposit Insurance”, The World Bank Economic
  • Review, Vol. 16, No. 1, pp. 109-137. 
  • Leaven, L. and Levine, R. (2008), “Bank Governance, Regulation and Risk Taking”,
  • NBER Working Paper Series, No: 14113. 
  • Ng, T.H., Lim, Y.S. and Tan N. L., (2010), “Deposit Insurance and Bank Risks: The
  • Case of Malaysia”, European Journal of Economics, Finance and Administrative
  • Sciences, Issue 18, 19-27.
  • Ninimaki, J-P. (2000), “The Effects of Competition on Banks’ Risk Taking with and
  • without Deposit Insurance”, Bank of Finland Discussion Papers, No. 21. 
  • Pennacchi, G. (2006), “Deposit Insurance, Bank Regulation and financial System
  • Risks”, Journal of Monetary Economics, Vol. 53, pp. 1-30. 
  • Silva, N. (2008), “Deposit Insurance, Moral Hazard and The Risk of Runs”, Central
  • Bank of Chile Working Papers No. 478.
  • Şıklar, İ. (2004), Finansal Ekonomi, Anadolu Üniversitesi Ya., No. 1588, Eskişehir. 
  • Yoon, K.H. and Jun, Y.S. (2012), “Deposit Insurance Increase and Risk Taking by
  • Banks”, International Research Journal of Finance and Economics, Issue 91. 
  • Wheelock, D.C. and Wilson, P.W. (1994), “Can Deposit Insurance Increase the Risk
  • of Bank Failure? Some Historical Evidence”, Federal Reserve Bank of St.Louis
  • Review, Vol. 76, No. 3, May/June 1994, pp. 57-71. 
  • Wu, R-J, and Chi, C-P, (2006), “Competition, Deposit Insurance and Bank Risk
  • Taking”, http://centerforpbbefr.rutgers.edu/2006/Paper%202006/16AS02-056
  • Chien-Ping%20Chi.pdf.
Toplam 75 adet kaynakça vardır.

Ayrıntılar

Bölüm Articles
Yazarlar

Gamze Gocmen Yagcilar

Yayımlanma Tarihi 8 Kasım 2015
Yayımlandığı Sayı Yıl 2014 Cilt: 3 Sayı: 4

Kaynak Göster

APA Yagcilar, G. G. (2015). EFFECTS OF DEPOSIT INSURANCE SYSTEM ON BANKS’ RISK TAKING INCENTIVES IN TURKEY. Journal of Business Economics and Finance, 3(4).

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