It is also possible that depositors may never recover the full value of their original deposits.5 We would expect that the impact of bank failures would be broader and harsher the larger and more intertwined the failed banks are with New Zealand’s economy.
Not only do New Zealand’s large banks employ a significant number of New Zealanders, but these banks also 3  It is also useful to recall that in 1989, the Development Finance Corporation, which was New Zealand’s seventh largest financial institution at the time (but not a bank), was placed into statutory management and ultimately liquidated.