COVERAGE OF DEPOSIT INSURANCE FUNDS

Zsófia Kenesey and László Pataki

Acta Carolus Robertus, 2017, vol. 07, issue 2

Abstract: During the recent years, the role of deposit insurance funds has increased, and their stable and efficient operation serves the interest of the bank system and also of the economy as a whole. More and more countries, including China, recognise that being familiar with the national bank system is not sufficient due to the complexity of today’s economic connections. The bankruptcy of a geographically distant credit institution may deeply affect the bank systems of other countries, and may lead to panic. In such cases, the depositors may rush the bank branches, the panic may spread and lead to the closure of additional banks, which may cause a recess of the economy as a whole. This is when the deposit insurance funds may intervene, which are intended to minimise the damages suffered by the depositors of the credit institutions and consequently by the economy as a whole in the crisis situation. In our country, the National Deposit Insurance Fund started its operation ca. 25 years ago, and it provides compensation for the depositors unfortunately more and more frequently, as a result of which its assets and coverage ratio have significantly reduced.

Keywords: Financial; Economics (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hukruc:265782

DOI: 10.22004/ag.econ.265782

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