Does Deposit Insurance Increase Banking System Stability?

Asli Demirguc-Kunt and Enrica Detragiache ()

No 2000/003, IMF Working Papers from International Monetary Fund

Abstract: This study analyzes panel data for 61 countries during 1980–97 and concludes that explicit deposit insurance tends to be detrimental to bank stability, the more so where bank interest rates are deregulated and the institutional environment is weak. Also, the adverse impact of deposit insurance on bank stability tends to be stronger when the coverage offered to depositors is extensive, when the scheme is funded, and when it is run by the government rather than by the private sector.

Keywords: WP; bank deposit; insurance scheme; insurance system; insurance dummy; G28; G21; E44; deposit insurance; design feature; design variable; deposit insurance variable; deposit insurance design; insurance design; Deposit insurance; Banking crises; Bank deposits; Moral hazard; Bank soundness; Africa; Global (search for similar items in EconPapers)
Pages: 29
Date: 2000-01-01
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Citations: View citations in EconPapers (88)

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