(A Study on Deposit Insurance Coverage and Market Discipline)

A Survey of the Literature on Banking in Korea : A Decade on from the Global Financial Crisis

“…For example, small savings banks tend to adopt a high-yield and high-risk strategy by raising deposits with high interest rates. In contrast to above two studies, Lee (2016) savings banks' asset quality. Interestingly, they show that this forbearance effect can be found in the behavior of the depositors of other savings banks in the same business area.…”

“…Kim (2019), on the other hand, finds that deposits in surviving (failing) savings banks decreases (increases) when they face higher management risks, indicating that failing savings banks weaken market discipline by aggressively pulling in insured deposits. Lee, Jung, Baek, and Park (2017) and Park and Han (2017) explore the existence of market discipline in each financial sector. Lee, Jung, Baek, and Park (2017) confirm that market discipline by large depositors works overall for the period from 2004 to 2011, although the degree of significance differs depending on the type of financial institution.…”

“…Lee, Jung, Baek, and Park (2017) and Park and Han (2017) explore the existence of market discipline in each financial sector. Lee, Jung, Baek, and Park (2017) confirm that market discipline by large depositors works overall for the period from 2004 to 2011, although the degree of significance differs depending on the type of financial institution. Park and Han (2017) also find that market discipline exists for both commercial banks and savings banks for the period between 2001 and 2009.…”