Deposit insurance systems of post-Soviet countries: A comparative analysis

Title: Deposit insurance systems of post-Soviet countries: A comparative analysis
Issue: Vol. 11, No 4, 2018
Published date: 12-2018 (print) / 12-2018 (online)
Journal: Journal of International Studies
ISSN: 2071-8330, eISSN: 2306-3483
Authors: Andreas Horsch
Technische Universität Bergakademie Freiberg

Larysa Sysoyeva
Institute for Business Technologies ‘UAB’ of the Sumy State University

Sergii Bogma
PJSC ‘Deloitte & Touche USC’, Kiev
Keywords: post-Soviet countries, deposit insurance, banking systems, European integration
DOI: 10.14254/2071-8330.2018/11-4/2
Language: English
Pages: 22-44 (23)
JEL classification: G21, G28, P20
This work was supported by the DAAD – German Academic Exchange Service [DAAD Project 57243548].

The article provides a comprehensive analysis of deposit insurance systems in the post-Soviet countries as of December 2017. The article brings up to date the earlier databases of Demirgüç-Kunt and various co-authors, covering 15 post-Soviet countries exclusively. The analysis shows that post-Soviet countries are on their way developing deposit insurance systems that can effectively protect clients and help establish a stable financial system. Altogether, the most crucial factor which does not allow post-Soviet countries to fully accept the EU deposit insurance regulations is the divergent course of economic development. The findings are further illustrated along the particular case of Ukraine.


1. About insurance of deposits of individuals in banks of the Russian Federation (О страховании вкладов физических лиц в банках Российской Федерации) (2003). Federal Law of the Russian Federation No. 177-FL. Dec 23, 2003. Accessed Jun 1, 2017, http://www.con

2. About measures to protect the rights of individual depositors of commercial banks in Ukraine (Про заходи щодо захисту прав фізичних осіб - вкладників комерційних банків України) (1998). Decree of the President of Ukraine № 996/98. Sep 10, 1998. Accessed J

3. About the guaranteeing of individuals’ deposits in the banking system (о гарантировании депозитов физических лиц в банковской системе) (2003). Law No. 575 (2003) of the Parliament of the Republic of Moldova. Dec 26, 2003. Accessed Jun 1, 2017. http://www.

4. About guarantees of saving funds of individuals in foreign currency on the accounts and deposits in banks of the Republic of Belarus (О гарантиях сохранности средств физических лиц в иностранной валюте, находящихся на счетах и во вкладах (депозитах) в бан

5. Allen, F., & Gale, D. (2000). Comparing Financial Systems. Cambridge (Mass.) and London: The MIT Press.

6. Alyeksyeyev, I., & Mazur, A. (2018). Adapting International Experience to the Deposit Guarantee System in Ukraine. Financial Sciences – Nauki o Finansach, 23(1), 9-21.

7. Arzhevitin, S. (2010). Why and how to reform the Deposit guarantee system. Visnyk of the National Bank of Ukraine, 177(11), 3-7.

8. Beck, T. (2003). The Incentive-Compatible Design of Deposit Insurance and Bank Failure Resolution Concepts and Country Studies. Policy Research Working Paper no. 3043, Washington, D.C.: The World Bank, Development Research Group – Finance Team.

9. Benston, G. J. (1998). Regulating Financial Markets: A Critique and some Proposals. Hobart Paper no. 135, London: Institute of Economic Affairs.

10. Calomiris, C. W. (1990). Is Deposit Insurance Necessary? A Historical Perspective. The Journal of Economic History, 50(2), 283–295.

11. Calomiris, C. W., & White, E. N. (1994). The Origins of Federal Deposit Insurance. In C. Goldin & G. D. Libecap (Eds.), The Regulated Economy: A Historical Approach to Political Economy (pp. 145-188). Chicago: University of Chicago Press.

12. Chan, Y.-S., Greenbaum, S. I., & Thakor, A. V. (1992). Is Fairly Priced Deposit Insurance Possible? The Journal of Finance, 47(1), 227-245.

13. Chernykh, L., & Cole, R. (2011). Does deposit insurance improve financial intermediation? Evidence from the Russian experiment. Journal of Banking & Finance, 35, 388-402.

14. Cojocaru, L., Falaris, E. M., Hoffman, S. D., & Miller, J.B. (2016): Financial System Development and Economic Growth in Transition Economies: New Empirical Evidence from the CEE and CIS Countries. Emerging Markets Finance & Trade, 52(1), 223-236.

15. Cummins, J. D. (1988). Risk-Based Premiums for Insurance Guaranty Funds. The Journal of Finance, 43(4), 823-839.

16. Demirgüç-Kunt, A., & Sobaci, T. (2001). Deposit insurance around the world. The World Bank Economic Review, 15(3), 481-490.

17. Demirgüç-Kunt, A., & Detragiache, E. (2002). Does deposit insurance increase banking system stability? Journal of Monetary Economics, 49(7), 1373-1406.

18. Demirgüç-Kunt, A., & Huizinga, H. (2004). Market discipline and deposit insurance. Journal of Monetary Economics, 51(2), 375-399.

19. Demirgüç-Kunt, A., & Kane, E. J. (2002). Deposit Insurance around the Globe: Where Does It Work? The Journal of Economic Perspectives, 16(2), 175-195.

20. Demirgüç-Kunt, A., Karacaovali, B., & Laeven, L. (2005). Deposit insurance around the world: a comprehensive database. World Bank Policy Research Working Paper 3628, June 2005, Washington, D.C.: The World Bank, Development Research Group – Finance Team.

21. Demirgüç-Kunt, A., Kane, E. J., & Laeven, L. (2008a). Determinants of Deposit-Insurance Adoption and Design. Journal of Financial Intermediation, 17(3), 407-438.

22. Demirgüç-Kunt, A., Kane, E. J., & Laeven, L. (2015). Deposit insurance around the world: a comprehensive analysis and database. Journal of Financial Stability, 20(10), 155-183.

23. Demirgüç-Kunt, A., Kane, E. J., & Laeven, L. (eds., 2008b). Deposit Insurance Around the World: Issues of Design and Implementation. Cambridge (Mass.) and London: The MIT Press.

24. Diamond, D., & Dybvig, P. (1983). Bank Runs, Deposit Insurance, and Liquidity. Journal of Political Economy, 91(3), 401-419.

25. Directive 94/19/EU of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes. Official Journal of the European Union L 135, 31/05/1994, 5-14.

26. Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 amending Directive 94/19/EC on deposit-guarantee schemes as regards the coverage level and the payout delay. Official Journal of the European Union L 68, 13/03/2009, 3-7.

27. Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantees schemes. Official Journal of the European Union L 173, 12/06/2014, 149-178.

28. Dovgan, J. (2012) Financial stability of the banking system of Ukraine (doctoral dissertation). The State Higher Educational Institution Ukrainian Academy of Banking of the National Bank of Ukraine, Sumy, Ukraine.

29. Financial Stability Forum (2001). Guidance for developing effective deposit insurance systems, Basel: FSF.

30. Fungáčová, Z., Weill, L., & Zhou, M. (2017). Bank Capital, Liquidity Creation and Deposit Insurance. Journal of Financial Services Research, 51, 97-123.

31. Garcia, G. (1999). Deposit Insurance: A Survey of Actual and Best Practices. IMF Working Paper No. 99/54, Washington, D.C.: International Monetary Fund.

32. Gerhardt, M., & Lannoo, K. (2011). Options for Reforming Deposit Protection in the EU. ECRI Policy Brief No. 4, Brussels: European Credit Research Institute.

33. Goodman, L. S., & Shaffer, S. (1984). The Economics of Deposit Insurance: A Critical Evaluation of Proposed Reforms. Yale Journal on Regulation, 2(1), 145-162.

34. Golembe, C. H. (1960). The Deposit Insurance Legislation of 1933 – An Examination of its antecedents and its purposes. Political Science Quarterly, 76(2), 181-200.

35. Hall, M. J. B. (2002). Incentive compatibility and the optimal design of deposit protection schemes: An assessment of UK arrangements. Journal of Financial Regulation and Compliance, 10(2), 115-134.

36. Howarth, D., & Quaglia, L. (2017). The difficult construction of a European Deposit Insurance Scheme: a step too far in Banking Union? Journal of Economic Policy Reform, 20, published online Dec 1, 2017,

37. IADI – International Association of Deposit Insurers (2009). The Effect of DIS on Banking Sector Development: The Example of Kazakhstan, Russia, and Ukraine. Research Paper, Eurasia Regional Committee, Basel: International Association of Deposit Insurers.

38. Kravchuk, H., & Vilkhovyk, O. (2014). Prospects for the development of deposit insurance in context changes in the level of moral hazard. Visnyk of the Chernihiv National Technological University, 1(72), 231-236.

39. Laeven, L. (2004). The Political Economy of Deposit Insurance. Policy Research Working Paper; No.3247. Washington, D.C.: The World Bank.

40. Laeven, L. (2014). Deposit Insurance in the European Union. In C. Enoch, L. Everaert, T. Tressel, & J. Zhou (Eds.), From Fragmentation to Financial Integration in Europe (pp. 279–293). Washington, D.C.: International Monetary Fund.

41. Lakstutiene, A., Barkauskaite, A., & Witkowska, J. (2018). The importance of systemic risk assessment in a risk-based common European Union deposit insurance system: case of Lithuania. Economic Research – Ekonomska Istraživanja, 31(1), 73-86.

42. Lee, S.-C., Lin, C.-T., & Tsai, M.-S. (2015). The pricing of deposit insurance in the presence of systematic risk. Journal of Banking & Finance, 51, 1-11.

43. Lee, S.-J., Mayers, D., & Smith, C. W. Jr. (1997). Guaranty funds and risk-taking – Evidence from the insurance industry. Journal of Financial Economics, 44(1), 3-24.

44. Masciandaro, D. (2007) Divide et Impera: Financial supervision unification and the central bank fragmentation effect. European Journal of Political Economy, 32(2), 285-315.

45. Niinimäki, J.-P. (2002). Bank panics in transition economies. BOFIT Discussion Papers 2/2002. Helsinki: Bank of Finland, Institute for Economies in Transition (BOFIT).

46. Ngalawa, H., Tchana, F. T., & Viegi, N. (2016). Banking instability and deposit insurance: The role of moral hazard. Journal of Applied Economics, 19(2), 323-350.

47. Ngo, P. T. H., Puente, D., & Virani, Z. (2016). The Role of Deposit Insurance in Liquidity Risk Management: Evidence from Systematic Banking Crises. Melbourne: Melbourne Business School, 2016 Financial Institutions, Regulation & Corporate Governance (FIRC

48. Nodia, G., Cenușă, D., & Minakov, M. (2017). Democracy and its Deficits: The path towards becoming European – style democracies in Georgia, Moldova and Ukraine. CEPS Working Document, No. 2017/12. Brussels: Centre for European Policy Studies.

49. On the System of Guaranteeing Natural Person Deposits (2012). Legislation of Ukraine, Doc 4452-VI, 1st version Feb 23, 2012. Accessed June 1, 2017.

50. Palubinskas, G. T., & Stough, R. R. (1999). Common Causes of Bank Failures in Post-Communist Countries. Working Paper, The Institute of Public Policy, George Mason University,

51. Pauly, M. V. (1974). Overinsurance and Public Provision of Insurance: The Roles or Moral Hazard and Adverse Selection. Quarterly Journal of Economics, 88(1), 42-64.

52. Payne, J. (2015). The Reform of Deposit Guarantee Schemes in Europe. European Company and Financial Law Review, 12(4), 539-562.

53. Poissonnier, A. (2017). The Baltics: Three Countries, One Economy? European Economy Economic Briefs 024, Brussels: European Commission.

54. Ronn, E. I., & Verma, A. K. (1986). Pricing Risk-Adjusted Deposit Insurance: An Option-Based Model. The Journal of Finance, 41(4), 871-895.

55. Savchenko, T. G. (2011). Структура механізму впливу банківської системи на рівноважні стани у економіці. Economy and Region, 31(4), 53-59.

56. Savchenko, T. G., & Kovács, L. (2017). Trust in the banking sector: EU experience and evidence from Ukraine. Financial Markets, Institutions and Risks, 1(1), 29-42.

57. Schoenmaker, D., & Gros, D. (2012). A European deposit insurance and resolution fund. Working Paper, No. 364, Amsterdam: Duisenberg School of Finance.

58. Schönfelder, B. (2012). Vom Spätsozialismus zur Privatrechtsordnung, eine Untersuchung über die Interdependenz zwischen Recht und Wirtschaft am Beispiel von Gläubigerschutz und Kredit. Berlin: Berliner Wissenschaftsverlag.

59. Stiglitz, J. E. (1975). Some Aspects of the Pure Theory of Corporate Finance: Bankruptcies and Takeovers. Bell Journal of Economics, 3(3), 458-482.

60. Straßberger, M., & Sysoyeva, L. (2016). Die aktuellen Entwicklungen der Bankenaufsicht im Lichte der Stabilität des Finanzsystems. Wirtschaftsdienst, 96(7), 486-491.

61. Stuchlik, A. (2016). European Deposit Insurance Scheme. Completing the Banking Union, EU legislation in progress. European Parliamentary Research Service. Brussels: European Parliament.

62. Talley, S. H. & Mas, I. (1980). Deposit Insurance in Developing Countries. World Bank Policy Research and External Affairs Working Paper, WPS 548. Washington, D.C.: The World Bank.

63. Thomann, E., & Zhelyazkova, A. (2017). Moving beyond (non-)compliance: the customization of European Union policies in 27 countries. Journal of European Public Policy, 24(9), 1269-1288.

64. Vasilyeva, T. A., & Lunyakov O. V. (2013). Financial cycles and financial imbalances in the economy. Економіка і регіон, 40(3), 124-130.