Extended

This study aims to observe the relationship between deposit insurance characterizations and behavioral aspects (ie time and risk preferences) towards withdrawal decisions under hypothesized economic shock. Our sample is drawn from 154 depositors in Indonesia, 42 percent of which are classified as prime depositors – those holding a significant amount of third-party funds in savings. The ?ndings suggest that the above-mentioned aspects have signi?cant influence on withdrawal decisions conditional on certain scenarios of economic shocks. Furthermore, we found evidence showing that not only deposit insurance characterizes initial withdrawals, it also has important implications in determining the contagion effect of massive withdrawals that may lead to the case of bank runs. We discuss our ?ndings in relevance to the current developments of banking sector and ?financial issues in Indonesia.