A hierarchical agency model of deposit insurance

Jonathan Carroll () and Shino Takayama ()

Annals of Finance, 2014, vol. 10, issue 2, 267-290

Abstract: This paper develops a hierarchical agency model of deposit insurance. The main purpose of the analysis is to propose a micro-founded model of deposit insurance schemes and study their effects on the behavior of depositors and the monitoring problem for a bank. This paper also characterizes a risk-based premium in equilibrium, and conducts a comparative statics analysis of depositors’ optimal actions. The results supply the basic theoretical foundation for designing deposit insurance schemes. Our findings are consistent with the empirical research on depositor behavior. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Deposit insurance; Banks; Regulation; Hierarchical agency model; G21 (search for similar items in EconPapers)
Date: 2014
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Working Paper: A Hierarchical Agency Model of Deposit Insurance (2010)
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DOI: 10.1007/s10436-013-0240-7

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