Deposit Insurance Coverage, Credibility of Non-insurance, and Banking Crises

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dc.contributor.author	Wihlborg, Clas	en_US
dc.contributor.author	Angkinand, Apanard	en_US
dc.date.accessioned	2009-02-04T10:24:54Z
dc.date.available	2009-02-04T10:24:54Z
dc.date.issued	2006-01-02T00:00:00Z	en_US
dc.identifier.uri	http://hdl.handle.net/10398/6808
dc.description.abstract	The ambiguity in existing empirical work with respect to effects of deposit insurance schemes on banks’ risk-taking can be resolved if it is recognized that absence of deposit insurance is rarely credible and that the credibility of non-insurance can be enhanced by explicit deposit insurance schemes. We show that under reasonable conditions for effects on risk-taking of creditor protection in banking, and for effects on credibility of non-insurance of explicit coverage of deposit insurance schemes, there exists a partial level of coverage that maximizes market discipline and minimizes moral hazard incentives for risk-taking in banking. Using both the occurrence of banking crises and non-performing loans in the banking sector as proxies for excessive risk-taking the results strongly support this hypothesis in industrial and emerging market economies. Policy recommendations on the country level require analyses of institutional factors affecting the credibility of non-insurance. In particular, the implementation of effective distress resolution procedures for banks would allow governments to reduce explicit deposit insurance coverage and, thereby, to strengthen market discipline. JEL Classification: G21; G28; F43 Keywords: Deposit Insurance; Banking Crisis; Insolvency Procedures, Market Discipline	en_US
dc.format.extent	55 s.	en_US
dc.language	eng	en_US
dc.relation.ispartofseries	LEFIC Working paper;2005-010	en_US
dc.title	Deposit Insurance Coverage, Credibility of Non-insurance, and Banking Crises	en_US
dc.type	wp	en_US
dc.accessionstatus	modt06jan02 miel	en_US
dc.contributor.corporation	Copenhagen Business School. CBS	en_US
dc.contributor.department	Center for Law, Economics and Financial Institutions at CBS	en_US
dc.contributor.departmentshort	LEFIC	en_US
dc.contributor.departmentuk	Center for Law, Economics and Financial Institutions at CBS	en_US
dc.contributor.departmentukshort	LEFIC	en_US
dc.idnumber	x656517289	en_US
dc.publisher.city	København	en_US
dc.publisher.year	2005	en_US