Practical analysis for investment professionals
04 April 2013

Poll: Why Didn’t the Cyprus “Bail-In” Cause a Bank Run?

Posted In: Economics

The recent “bail-in” of Cyprus by the EU, IMF, and European Central Bank troika forced depositors in Cyprus banks to turn over about 40% of their assets to the banking system. This action hasn’t caused a bank run in the greater eurozone yet, so in a poll conducted in the CFA Institute Financial NewsBrief, we asked professional investors why this is the case.

Many investors feared that the usage of bank deposits for a “bail-in” of the banking system in Cyprus would cause a run on banks in other financially troubled countries in the EU. Why has this not happened?

Poll: Why Didn't the Cyprus "Bail-In" Cause a Bank Run?

Nearly 38% of 889 respondents believe that the public is taking a wait-and-see approach to consider how events in Cyprus unfold. The next two most common responses are that the situation in Cyprus is unique (23% of respondents) and that people remain unconcerned that the events in Cyprus could affect them (21% of respondents).

The combination of these three responses suggests that 82% of investors view the events in Cyprus as no immediate threat to the rest of Europe. In a fascinating juxtaposition, only 12% of respondents view the European banking system as solvent and only 6% view the existing depositor insurance as adequate. In total, these results imply that investors view the system as unsafe but believe the events in Cyprus are unlikely to affect the whole of Europe.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

About the Author(s)
Ron Rimkus, CFA

Ron Rimkus, CFA, was Director of Economics & Alternative Assets at CFA Institute, where he wrote about economics, monetary policy, currencies, global macro, behavioral finance, fixed income and alternative investments, such as gold and bitcoin (among other things). Previously, he served as SVP and Director of Large-cap Equity Products for BB&T Asset Management, where he led a team of research analysts, 300 regional portfolio managers, client service specialists, and marketing staff. He also served as a Senior Vice President and Lead Portfolio Manager of large-cap equity products at Mesirow Financial. Rimkus earned a BA degree in economics from Brown University and his MBA from the Anderson School of Management at UCLA. Topical Expertise: Alternative Investments · Economics

3 thoughts on “Poll: Why Didn’t the Cyprus “Bail-In” Cause a Bank Run?”

  1. Very nice survey !! On one hand we are witnessing the ill health of Cyprus and Doctor EuroZone is not ready to treat the patient.. God only knows how ll Cyprus come out of this menace.. Prob is not just with Cyprus, but with the way entire Eurozone is operating.. Sometimes its Greece, sometimes its Italy, now Cyprus.. Once Cyprus is cured, who ll be the next ??

    Please do read our views on the situation of Cyprus..

  2. Fascinating poll, I also tweeted you in response to it…. A very strange set of public opinion results. That said, considering the lack of confidence in other EU banks in PIIGS countries on the European periphery; I think going after depositors with “bail-in” policies may have worked this time but I doubt that such a “bail-in” move will be politically palatable should another Cyprus-type banking situation occur.

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