Does Deposit Insurance Increase Banking System Stability?

By Asli Demirgüç-Kunt, Enrica Detragiache

January 1, 2000

Preview Citation

Format: Chicago

Asli Demirgüç-Kunt, and Enrica Detragiache. Does Deposit Insurance Increase Banking System Stability?, (USA: International Monetary Fund, 2000) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Bank deposits, Bank soundness, Banking, Banking crises, Deposit insurance, Financial crises, Financial sector policy and analysis, Financial services, Moral hazard

Keywords: Africa, Bank deposit, Bank deposits, Bank soundness, Banking crises, Deposit insurance, Deposit insurance, Deposit insurance design, Deposit insurance variable, Design feature, Design variable, E44, G21, G28, Global, Insurance design, Insurance dummy, Insurance scheme, Insurance system, Moral hazard, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/003
Stock No:

WPIEA0032000
ISBN:

9781451841893
ISSN:

1018-5941

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