WHEN PRIME DEPOSITORS RUN ON THE BANKS: A BEHAVIORAL APPROACH

Authors

Natanael Waraney Gerald Massie, University of Indonesia, IndonesiaFollow
Chaikal Nuryakin, University of Indonesia, IndonesiaFollow

Document Type

Article

Abstract

This paper examines the effect of two psychological attributes, namely an individual’s risk and time preference, on withdrawal decisions. Our sample is a pool of prime depositors in Indonesia, mainly due to the country’s deposit market being heavily concentrated on such depositors. We find that most of the prime depositors are risk averse long-term depositors. The regression results show that there is a significant correlation between the decision to withdraw and individual risk and time preference in most economic shock scenarios. The study concludes that a bank-run could happen if the rupiah depreciates by approximately 27% (from Rp 13,436 to Rp 17,000) and when there is a medium or a large bank failure.

Recommended Citation

Massie, Natanael Waraney Gerald and Nuryakin, Chaikal (2020) "WHEN PRIME DEPOSITORS RUN ON THE BANKS: A BEHAVIORAL APPROACH," Bulletin of Monetary Economics and Banking: Vol. 23: No. 1, Article 8.
DOI: https://doi.org/10.21098/bemp.v23i1.954
Available at: https://bulletin.bmeb-bi.org/bmeb/vol23/iss1/8

First Page

139

Last Page

152

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Indonesia

Affiliation

University of Indonesia