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PhD student Jonathan Lee will be presenting at the IADI Research Conference next week

PhD Student Jonathan Lee

PhD student Jonathan Lee

17 May 2019

The cutting-edge research conducted here at the School of Economics, Finance and Management continues to have direct impact on international banking policy. This month Finance PhD student Jonathan Lee is travelling to the Bank of International Settlements in Basel, Switzerland together with Professor Klaus Schaeck to present their research on deposit insurance to key policy makers and banking leaders.

They will be presenting their work on ‘Private deposit insurance, deposit flows, and bank lending’ at the International Association of Deposit Insurers (IADI) Research Conference. This paper is co-authored by Dr Piotr Danisewicz, also based at the University of Bristol.

We sat down with Jonathan to find out more about the conference, and ask him about his work and life as a PhD student in Bristol.

Tell us about the focus of your research Jonathan

We examine the role of private deposit insurance for deposit flows and bank lending during a financial crisis.

Exploiting the availability of private deposit insurance to banks in Massachusetts, we show that banks whose deposits are privately insured experience greater deposit inflows and expand lending during the recent crisis, in contrast to banks whose deposits are only federally insured.

Our results highlight the complementary role of private sector solutions for the regulatory framework in banking.

How will your research potentially shape future banking policy and how is it relevant to the IADI Research Conference?

This work illuminates the current debate in Europe, where policy initiatives are under way to establish the third pillar of the European Banking Union, the European Deposit Insurance Scheme. Our results suggest that depositors can differentiate between different types of insurance available to them which carries the risk that countries with lower deposit insurance coverage may experience deposit outflows during crises. Therefore, harmonizing deposit insurance schemes under a European Deposit Insurance Scheme has potential to mitigate destabilizing deposit outflows.

Our findings also suggest that banks that have better access to deposits are less vulnerable to short-term funding risks during crises. Therefore, these results provide insights into the importance of deposits during crises and support the establishment of the net stable funding ratio and liquidity coverage ratio requirement under Basel III.

By presenting our findings at the IADI Research Conference, we hope that international policy makers, particularly those who specialise in deposit insurance limits and banking regulation, may find our research relevant to their future policy plans.

Sounds exciting! So what brought you to Bristol and what do you like about the university?

I already knew Professor Klaus Schaeck from Lancaster University and I was very interested in his work, so he inspired me to move here. I also knew that the University of Bristol has a great academic reputation and that the Department for Accounting and Finance is a large and diverse department with lots of opportunities and some really interesting research going on, both empirical and theoretical, with a clear impact on real-world banking policy.

I feel at home here because there are so many people from all over the world – I am from Hong Kong. I love that I get to live in a place that feels like a proper city but also has lots of beautiful countryside close by. If you are looking for a university with a welcoming community atmosphere then Bristol is perfect.

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