Deposit Insurance, Market Discipline and Bank Risk
William Pyle () and
Koen Schoors ()
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Koen Schoors: -
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration
Using evidence from Russia, we explore the e ect of the introduction of deposit insurance on bank risk. Drawing on within-bank variation in the ratio of firm deposits to total household and firm deposits, so as to capture the magnitude of the decrease in market discipline after the introduction of deposit insurance, we demonstrate for private, domestic banks that larger declines in market discipline generate larger increases in traditional measures of risk. These results hold in a di erence-in-di erence setting in which state and foreign-owned banks, whose deposit insurance regime does not change, serve as a control..
Keywords: deposit insurance; market discipline; moral hazard; risk taking; banks; Russia (search for similar items in EconPapers)
JEL-codes: E65 G21 G28 P34 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cis, nep-ias and nep-tra
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Working Paper: Deposit insurance, market discipline and bank risk (2019)
Working Paper: Deposit Insurance, Market Discipline and Bank Risk (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:19/953
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