Deposits Insurance Fund regulation was approved by the council of ministers of Islamic republic of Iran about five years ago on 2012. However, it has not been fully implemented by the Iranian banking sector, yet. Hence, as there might be some concerns regarding to the new regulation, in this paper authors investigate whether this new regulation affects Iranian depositors’ trust in banking system. The contribution of this paper is to use micro level data, for the first time, in order to analyze the impact of Implementation of Deposit Insurance on Iranian Banking System. In this research, authors use a questionnaire, which contains questions about personal information and depositors’ opinion about banks and safety of deposits. Questions adapted from a Prean and Stix (2011) study “effect of raising deposit insurance coverage in times of financial crisis in Croatia”. Questioners were distributed between two groups of Tehran’s depositors. First group consists of those who were not aware about the deposit insurance implementation. Second group informed about the implementation of deposit insurance regulation. Results of this study are somehow consistent with previous studies about effects of Deposit Insurance on Iranian banking system. Findings show introducing deposit insurance, decreases depositors’ trust to the safety of deposits in Iran. Hence, all aspects of implementing of deposit insurance fund must be considered by the Central Bank I.R. of Iran.
