Abstract
This study aims to observe the relationship between deposit insurance characterizations and behavioral aspects (i.e. time and risk preferences) towards withdrawal decisions under hypothesized economic shock. Our sample is drawn from 154 depositors in Indonesia, 42 percent of which is classi?ed as prime depositors – those holding a signi?cant amount of third-party fund in savings. The ?ndings suggest that the above-mentioned aspects have signi?cant in?uences on withdrawal decisions conditional on certain scenarios of economic shocks. Furthermore, we found evidence showing that not only deposit insurance characterizations in?uence initial withdrawals, it also have important implications in deterring the contagion effect of massive withdrawal that may lead to the case of bank runs. We discuss our ?ndings in relevance to the current developments of banking sector and ?nancial issues in Indonesia.
