How Country and Safety-Net Characteristics Affect Bank Risk-Shifting

Armen Hovakimian, Edward Kane and Luc Laeven

No 2002-10, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: Risk-shifting occurs when creditors or guarantors are exposed to loss without receiving adequate compensation. This project seeks to measure and compare how well authorities in 56 countries controlled bank risk shifting during the 1990s. Although significant risk shifting occurs on average, substantial variation exists in the effectiveness of risk control across countries. We find that the tendency for explicit deposit insurance to exacerbate risk shifting is tempered by incorporating loss-control features such as risk-sensitive premiums, coverage limits, and coinsurance. Introducing explicit deposit insurance has had adverse effects in environments that are low in political and economic freedom and high in corruption.

Pages: 44 pages
Date: 2002-09
Note: June, 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/13888/wp2002-10a.pdf

Related works:
Journal Article: How Country and Safety-Net Characteristics Affect Bank Risk-Shifting (2003)
Working Paper: How Country and Safety-Net Characteristics Affect Bank Risk-Shifting (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2002-10

Access Statistics for this paper

More papers in CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University Contact information at EDIRC.
Bibliographic data for series maintained by Reiko Suzuki ( this e-mail address is bad, please contact ).