Saving in cash or saving at banks: The role of deposit insurance guarantees

This study explores how awareness of deposit insurance affects household saving behavior, particularly the preference for cash hoarding over bank deposits. In many developing and transition economies, households hold significant portions of their savings in cash, despite the availability of interest-bearing bank accounts. A key factor behind this behavior is a lack of awareness or trust in deposit insurance schemes, which guarantee the safety of bank deposits. Through a survey experiment, we aim to assess whether raising awareness about deposit insurance influences individuals' trust in banks and their intended savings decisions. We also investigate how past experiences with banking crises impact these effects. This research links the literature on cash hoarding and deposit insurance, offering new insights into how financial education may shift household savings from cash to bank deposits.