Deposit Insurance Without Commitment: Wall St. Versus Main St

Russell Cooper and Hubert Kempf ()

No 16752, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the provision of deposit insurance without commitment in an economy with heterogenous households. When households are identical, deposit insurance will be provided ex post to reap insurance gains. But the ex post provision of deposit insurance redistributes consumption when households differ in their claims on the banking system as well as in their tax obligations to finance the deposit insurance. Deposit insurance will not be provided ex post if it requires a (socially) undesirable redistribution of consumption which outweighs insurance gains.

JEL-codes: D84 E44 G21 G38 (search for similar items in EconPapers)
Date: 2011-01
Note: EFG
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Citations: View citations in EconPapers (7)

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