A Note on Bank Default Risk and Delivery Channel Strategy under Deposit Insurance Fund Protection

Shi Chen, Chuen-Ping Chang and Kevin P. Keh

International Journal of Financial Research, 2014, vol. 5, issue 4, 114-119

Abstract: Increasing investment in human resource relative to information technology system in retail banking delivery channels increases the optimal bank interest margin and decreases the default risk in the bank¡¯s equity returns during a financial crisis. Raising the regulatory barrier inducing a wealth transfer from shareholders to the Federal Deposit Insurance Corporation reinforces both the effects above. Human resource investment with regulatory deposit insurance fund protection as such make the distressed bank more prudent to risk-taking, thereby contributing to the stability of the banking system.

Keywords: barrier option; FDIC; delivery channel choice (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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