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Sharia-Compliant Deposit Insurance and Deposit Flows: Evidence from a Dual Banking Market

Year: 2025

Type: article

Abstract: We investigate whether the introduction of Islamic Deposit Insurance (IDI) affects deposit flow of and the pricing by Islamic banks vis-à-vis conventional banks for the case of Indonesia. Using December 2014 announcement of a separate deposit insurance scheme for Indonesia’s Islamic and traditional banks into two different funds as an exogenous event, we employ a difference-in-differences (DID) framework using matched bank-level data from 18 Islamic and conventional banks, comparing periods before and after the policy announcement. Our findings indicate that the announcement significantly boosts the growth of small deposits in Islamic banks compared to traditional banks, with an apparent increase in deposit growth after separating deposit insurance funds.

Source: Journal of Islamic Monetary Economics and Finance

DOI: 10.21098/jimf.v11i4.2696

Authors: Putra Pamungkas, Laetitia Lepetit, Clovis Rugemintwari

Institutions: Sebelas Maret University, Laboratoire d'Analyse et de Prospective Economiques, Université de Limoges

Language: English

Topic: Islamic Finance and Banking Studies

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: diamond

OpenAlex ID: W4416769745

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