Deposit Insurance in Times of Financial Crisis

Vesna Micajkova
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Vesna Micajkova: NLB Tutunska Banka AD

South-Eastern Europe Journal of Economics, 2013, vol. 11, issue 2, 165-176

Abstract: The role of deposit insurance and the design features of deposit insurance systems are undergoing important changes in light of the 2008/9 global crisis. Changes were made in order to restore the public confidence in the banking system, stop widespread bank runs during the crisis and increase the stability of the financial system. The purpose of this paper is to present the changes in deposit insurance around the world as a result of the financial crisis of 2008. Three main changes will be observed: the raising of the maximum level of deposit insurance coverage, the elimination of coinsurance and changes in the speed of depositor's payout. Effects of these changes will be analyzed, and special emphasis will be laid on the deposit insurance system of the Republic of Macedonia. The changes in deposit insurance can affect the moral hazard problem, the premium assessment base and the potential financial commitment of the deposit insurance institution. Changes in the deposit insurance regulations of the Republic of Macedonia did not affect the premium assessment base, but the potential financial obligation of the deposit insurance institution was increased. Regarding the moral hazard problem mitigation, Deposit Insurance Fund - Skopje should consider risk-based premium introduction.

Keywords: Financial Crisis; Deposit Insurance; Financial Stability (search for similar items in EconPapers)
JEL-codes: G01 G20 G21 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:seb:journl:v:11:y:2013:i:2:p:165-176

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