Deposit Insurance: Handle With Care

Asli Demirgüç-Kun and Edward Kane
Authors registered in the RePEc Author Service: Asli Demirguc-Kunt

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: Explicit deposit insurance has been spreading rapidly in the past decades, most recently to countries with low levels of financial and institutional development. This paper documents the extent of crosscountry differences in deposit-insurance design and reviews empirical evidence on how particular design features affect private market discipline, banking stability, financial development, and the effectiveness of crisis resolution. This evidence challenges the wisdom of encouraging countries to adopt explicit deposit insurance without first stopping to assess and remedy weaknesses in their informational and supervisory environments. The paper also includes recommendations for reforming the Chilean deposit insurance system based on the results of the research reviewed here.

Date: 2003-10
New Economics Papers: this item is included in nep-ias and nep-rmg
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Citations: View citations in EconPapers (1)

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Chapter: Deposit Insurance: Handle with Care (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:227

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