Scenario Analysis of Deposit Protection Insurance Adequacy in Sierra Leone

Deposit protection funds are now conventional across sovereigns as integral to financial system safety net and supportive to financial system stasis. This paper examines the potential adequacy of deposit protection fund in Sierra Leone by employing scenario analysis with data vintage 2021Q1-2023Q4 regarding the banking ecosystem health check. The paper unravels that adequacy of deposit protection fund in Sierra Leone should mimic some proportion of the gross domestic products (GDP) entrenched on Sierra Leone macro-economic and financial target framework that is dynamic. Thus, the paper recommends the need for robust banking supervision and macroeconomic and financial stability assessments can assuage unintended ramifications of deposit protection fund on banking ecosystem risk in buoyant episodes, thereby enthroning suitable incentive framework is crucial for financial system stasis in Sierra Leone.