Deposit Insurance And Financial Development
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Deposit Insurance And Financial Development
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Author : Robert J. Cull
language : en
Publisher: World Bank Publications
Release Date : 2001
Deposit Insurance And Financial Development written by Robert J. Cull and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Banking law categories.
Do deposit insurance programs contribute to financial developmen? Yes, but only if the regulatory environment is sound.
Deposit Insurance And Financial Development
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Author : Robert Cull
language : en
Publisher:
Release Date : 2003
Deposit Insurance And Financial Development written by Robert Cull and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with categories.
This paper provides empirical evidence on the impact of deposit insurance on financial development and stability, broadly defined to include the level of banking activity and the stability of the banking sector. We use a unique dataset capturing a variety of deposit insurance features across countries, such as coverage, premium structure, etc. and synthesize available information by means of principal component indices. This paper is the first in this field of the literature to specifically address sample selection concerns by estimating a generalized Tobit model both via maximum likelihood and the Heckman 2-step method. The empirical construct is guided by recent theories of banking regulation that employ an agency framework. The basic moral hazard problem is the incentive for depository institutions to engage in excessively high-risk activities, relative to socially optimal outcomes, in order to increase the option value of their deposit insurance guarantee. The overall empirical evidence is consistent with the likelihood that generous government-funded deposit insurance might have a negative impact on financial development and growth in the long run, except in countries where the rule of law is well established and bank supervisors are granted sufficient discretion and independence from legal reprisals. Insurance premium requirements on member banks, even when risk-adjusted, are instead found to have little effect in restraining banks' risk-taking behavior.
How Deposit Insurance Affects Financial Depth
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Author : Robert J. Cull
language : en
Publisher: World Bank Publications
Release Date : 1998
How Deposit Insurance Affects Financial Depth written by Robert J. Cull and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with Banks and banking categories.
January 1998 Whether the adoption of explicit deposit insurance strengthens financial markets or weakens them depends on the circumstances in which it is adopted. Adopting it to counteract instability appears to have little (or negative) effect. Adopting it when government credibility and institutional development are high appears to have a positive effect on financial depth. Should we expect deposit insurance to have a positive effect on development of the financial sector? All insurance pools individual risks: premiums are paid into a fund from which losses are met. In most circumstances, a residual claimant to the fund (typically a private insurance company) loses money when losses exceed premiums. Claimants that underprice risk tend to go bankrupt. With most deposit insurance, however, the residual claimant is a government agency with very different incentives. If the premiums paid by member banks cannot cover current fund expenditures, the taxpayer makes up the shortfall. Facing little threat of insolvency, there is less incentive for administrative agencies to price risk accurately. In the United States, researchers have found that the combination of increasing competition in banking services and underpriced deposit insurance led to riskier banking portfolios without commensurate increases in bank capital. Deposit insurance may facilitate risk-taking, with negative consequences for the health of the financial system. On the positive side, insurance may give depositors increased confidence in the formal financial sector-which may decrease the likelihood of bank runs and increase financial depth. Indeed, simple bivariate correlations between explicit insurance and financial depth are positive. But when one also controls for income and inflation, that relationship disappears-in fact, the partial correlation between changes in subsequent financial depth and the adoption of explicit insurance is negative (and quite pronounced). Counterintuitive though it may be, that stylized fact may be partially explained by the political and economic factors that motivated the decision to establish an explicit scheme. The circumstances surrounding decisions about deposit insurance are associated with different movements in subsequent financial depth. Adopting explicit deposit insurance to counteract instability in the financial sector does not appear to solve the problem. The typical reaction to that type of decision has been negative, at least with regard to financial depth in the three years after the program's inception. Adopting explicit deposit insurance when government credibility and institutional development were high appears to have had a positive effect on financial depth. This paper-a product of the Development Research Group- part of a larger effort in the group to study the design, implementation, and effects of deposit insurance programs.
Deposit Insurance Around The Globe
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Author : Asl? Demirgüç-Kunt
language : en
Publisher: World Bank Publications
Release Date : 2001
Deposit Insurance Around The Globe written by Asl? Demirgüç-Kunt and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with Bank failures categories.
Explicit deposit insurance has been spreading rapidly in recent years, even to countries with low levels of financial and institutional development. Economic theory indicates that deposit-insurance design features interact--for good or ill--with country-specific elements of the financial and governmental contracting environment. This paper documents the extent of cross-country differences in deposit-insurance design and reviews empirical evidence on how particular design features affect private market discipline, banking stability, financial development, and the effectiveness of crisis resolution. This evidence challenges the wisdom of encouraging countries to adopt explicit deposit insurance without first stopping to assess and remedy weaknesses in their informational and supervisory environments.
Market Discipline And Financial Safety Net Design
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Author : Aslı Demirgüç-Kunt
language : en
Publisher: World Bank Publications
Release Date : 1999
Market Discipline And Financial Safety Net Design written by Aslı Demirgüç-Kunt and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with Banks and banking categories.
It is difficult to design and implement an effective safety net for banks, because overgenerous protection of banks may introduce a risk-enhancing moral hazard and destabilize the very system it is meant to protect. The safety net that policymakers design must provide the right mix of market and regulatory discipline, enough to protect depositors without unduly undermining market discipline on banks.
Deposit Insurance Around The World
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Author : Asli Demirgüç-Kunt
language : en
Publisher: MIT Press (MA)
Release Date : 2008
Deposit Insurance Around The World written by Asli Demirgüç-Kunt and has been published by MIT Press (MA) this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business & Economics categories.
Drawing on an original cross-country dataset on deposit insurance systems, an assessment of the impact of deposit insurance on banking outcomes and the policy implications for developing countries.
Deposit Insurance Around The Globe
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Author : Asli Demirgüç-Kunt
language : en
Publisher:
Release Date : 2016
Deposit Insurance Around The Globe written by Asli Demirgüç-Kunt and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Developing countries should first address weaknesses in their informational and supervisory environments before adopting explicit deposit insurance.Explicit deposit insurance has been spreading rapidly in recent years, even to countries not advanced in financial and institutional development. Economic theory indicates that deposit insurance design features interact - for good or ill - with country-specific elements of the financial and governmental contracting environment. Demirguc-Kunt and Kane document the extent of cross-country differences in deposit insurance design and review empirical evidence on how design features affect private market discipline, banking stability, financial development, and the effectiveness of crisis resolution. This evidence challenges the wisdom of encouraging countries to adopt explicit deposit insurance without first addressing weaknesses in their informational and supervisory environments.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to improve the design of deposit insurance systems. The authors may be contacted at [email protected] or [email protected].
Does Deposit Insurance Increase Banking System Stability
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Author : Asl? Demirgüç-Kunt
language : en
Publisher: World Bank Publications
Release Date : 1999
Does Deposit Insurance Increase Banking System Stability written by Asl? Demirgüç-Kunt and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with Asset Portfolio categories.
"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"--Cover.
Finance Financial Sector Policies And Long Run Growth
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Author : Asli Demirguc-Kunt
language : en
Publisher: World Bank Publications
Release Date : 2008
Finance Financial Sector Policies And Long Run Growth written by Asli Demirguc-Kunt and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Access to Finance categories.
Abstract: The first part of this paper reviews the literature on the relation between finance and growth. The second part of the paper reviews the literature on the historical and policy determinants of financial development. Governments play a central role in shaping the operation of financial systems and the degree to which large segments of the financial system have access to financial services. The paper discusses the relationship between financial sector policies and economic development.
H R 962 The Economic Growth And Financial Institutions Regulatory Paperwork Reduction Act Of 1993
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Author : United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on Financial Institutions Supervision, Regulation, and Deposit Insurance
language : en
Publisher:
Release Date : 1994
H R 962 The Economic Growth And Financial Institutions Regulatory Paperwork Reduction Act Of 1993 written by United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on Financial Institutions Supervision, Regulation, and Deposit Insurance and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with Business & Economics categories.