On the Optimality of the Deposit Insurance Premium

Wilfredo L Maldonado (), Wesley Augusto de Freitas Borges () and Rodrigo De Losso ()
Authors registered in the RePEc Author Service: Marcio Issao Nakane

No 2025_04, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: This paper proposes a methodology for determining the optimal insurance premium (IP) on bank deposits charged by a Deposit Insurer (DI). To this end, we define a simple economy composed of a representative consumer/lender, a firm/borrower, a financial intermediary (bank), and a DI that partially insures the lenders’ deposits. The equilibrium of this economy is parameterized by the IP rate, and its optimal value is the one that maximizes economic welfare. The equilibrium condition also provides a simple, testable relationship between interest rates and insurance premium rates. Finally, we conduct empirical exercises to analyze how the optimal IP rate responds to changes in the fundamental parameters of the model.

Keywords: Bank deposit insurance; capital intermediation; default coverage (search for similar items in EconPapers)
JEL-codes: G22 G28 G52 (search for similar items in EconPapers)
Date: 2025-06-16
New Economics Papers: this item is included in nep-spo
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.repec.eae.fea.usp.br/documentos/Maldonado_Borges_De-Losso_04WP.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
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:spa:wpaper:2025wpecon4

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers, Department of Economics from University of São Paulo (FEA-USP) Contact information at EDIRC.
Bibliographic data for series maintained by Pedro Garcia Duarte ( this e-mail address is bad, please contact ).