MODIS: A Market-Oriented Deposit Insurance Scheme

Reza Vaez-Zadeh, Danyang Xie and Edda Zoli
Additional contact information
Reza Vaez-Zadeh: IMF
Edda Zoli: IMF

Finance from EconWPA

Abstract: This paper argues that an optimal deposit insurance scheme would allow the level of insurance coverage to be determined by the market. Based on this principle, the paper proposes an insurance scheme that minimizes distortions and embodies fairness and credibility, two essential characteristics of a viable and effective deposit insurance scheme. Using a simple model for the determination of the optimal level of insurance coverage, it is shown that the optimal coverage is higher for developing compared to developed countries; a condition that is broadly satisfied by prevailing deposit insurance practices around the world.

Keywords: Deposit Insurance; Market-Oriented Approach (search for similar items in EconPapers)
JEL-codes: G21 G28 G33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-rmg
Date: Written 2002-12-03
Note: Type of Document - PDF; prepared on IBM PC ; to print on HP;
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http://129.3.20.41/eps/fin/papers/0212/0212001.pdf (application/pdf)

Related works:
Working Paper: MODIS: A Market-Oriented Deposit Insurance Scheme (2002)
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