Deposit insurance and banking stability

• Main Authors: Aquino, Altair Astraea, Babanto, Joanna Rae, Magday, Al Benedict, Santos, Jan Briace
• Format: text
• Language: English
• Published: Animo Repository 2006
• Subjects: Deposit insurance; Banks and banking > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18432
• Institution: De La Salle University

Depository institutions play a crucial role in an economy. In this paper, the researchers want to determine if there is a relationship between deposit insurance and banking crisis. In answering this question, a linear multiple regression model is used. In analyzing the impact of deposit insurance to banking stability, the variable coverage to deposits per capita ratio is used. The inclusive years are from 1963-2003. All the necessary data are taken from the International Financial Statistics. From the results, deposit insurance is significant to banking crisis. The deposit insurance variable has a negative coefficient indicating that it negatively correlates to the crisis variable and it is significant at the 95% confidence level. This denotes that the presence of deposit insurance for the Philippines banking system does decrease the likelihood of having a systematic banking crisis.