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Deposit insurance doesn't prevent bank runs-BSP
Manila Bulletin
|June 11 2025
Even with the safety net of deposit insurance, both small and large depositors tend to pull out their funds when a nearby bank shuts down, suggesting that fear of losing access to cash outweighs the assurance of protection, according to a study co-authored by top Bangko Sentral ng Pilipinas (BSP) officials.
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"A bank closure does lead to significant withdrawals by depositors at other banks in the vicinity," said a study titled "Do small bank deposits run more than large ones? Three event studies of contagion and financial inclusion," authored by BSP Governor Eli M. Remolona, Jr., BSP Senior Assistant Governor Johnny Noe E. Ravalo, and University of the Philippines (UP) Professor Emeritus Dante B. Canlas.
This story is from the June 11 2025 edition of Manila Bulletin.
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