Bank Runs and Moral Hazard: A Review of Deposit Insurance

Deniz Anginer and Asli Demirguc-Kunt

No 8589, Policy Research Working Paper Series from The World Bank

Abstract: Deposit insurance is a widely adopted policy to promote financial stability in the banking sector. Deposit insurance helps ensure depositors'confidence in the financial system and prevents contagious bank runs, but it also comes with an unintended consequence of encouraging banks to take on excessive risk. This paper reviews the economic costs and benefits of deposit insurance and highlights the importance of institutions and specific design features for how well deposit insurance schemes work in practice.

Keywords: Deposit Insurance; Financial Structures; Banks&Banking Reform; Judicial System Reform; Economic Growth (search for similar items in EconPapers)
Date: 2018-09-19
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Citations: View citations in EconPapers (10)

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