Financial Inclusion for Financial Stability: Access to Bank Deposits and the Growth of Deposits in the Global Financial Crisis

By Rui Han, Martin Melecky. 2013

256 citations recorded by the source corpus.

In crisis times, depositors get anxious, can run on banks, and withdraw their deposits. Correlated withdrawals of bank deposits could be mitigated if bank deposits are more diversified, that is, held by more individuals. This paper examines the link between the broader access to bank deposits prior to the 2008 crisis and the dynamics of bank deposit growth during the crisis, while controlling for relevant covariates. Employing proxies for access to deposits and the use of bank deposits, the authors find that greater access to bank deposits can make the deposit funding base of banks more resilient in times of financial stress. Policy efforts to enhance financial stability should thus not only focus on macroprudential regulation, but also recognize the positive effect of broader access to bank deposits on financial stability.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/e7567df31a4523036bbd157349777eb1ee566bf6

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Citations in the corpus

Financial Stability and Financial Inclusion (2014, background): “index of Honohan (2008) measuring access to bank deposits before the 2008 crisis period and the Demirguc-Kunt and Klapper (2012) measure of the share of people that were using banking deposits in 2011, cited previously, plus a number of control variables.”
Impact of digital finance on financial inclusion and stability (2018, unknown): “It provides low-income individuals with the possibility to save for the future which fosters stability in personal finance, and a high level of use of bank deposits which contributes to securing a more stable deposit base for banks distressed times (Han and Melecky, 2013).”
Is financial inclusion good for bank stability? International evidence (2017, background): “Recently, Han and Melecky (2013) find international evidence for the period 2006-2010 that, by dint of the law of large number, correlated deposit withdrawals (i.e., bank run) could be mitigated during stressful times if bank deposits are more diversified i.e., held by more individuals and firms.”
Financial inclusion and development : recent impact evidence (2014, background): “Research by the World Bank (Han and Melecky 2013) also suggests that broader financial inclusion can coincide with greater financial stability, though sorting out the lines of causation between those two sets of variables remains a challenge.”
Financial Inclusion - Issues for Central Banks (2015, background): “Indeed, during the global financial crisis, total deposits fell by less in economies where the degree of financial inclusion was higher in terms of bank deposits, especially for middle-income countries, even after controlling for other factors (Han and Melecký (2013)).”
Financial inclusion and stability in the Asian region using bank-level data (2020, methodology): “On that basis, financial inclusion mitigates income inequality by giving poor households an economically beneficial motivation to strive for improvement, rather than leading to persistent poverty (Linyang, 2018). In an attempt to investigate the level of financial inclusion and its determinants in C”
Understanding Financial Inclusion in China (2015, background): “Financial inclusion provides individuals with the possibility of having a safe place to save for the future and so can foster financial stability, as high level of use of bank deposits contributes to a more stable deposit base for banks in troubled times (Han and Melecky, 2013).”