Deposit Insurance In A Changing Environment
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Deposit Insurance In A Changing Environment
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Author : Federal Deposit Insurance Corporation
language : en
Publisher:
Release Date : 1983
Deposit Insurance In A Changing Environment written by Federal Deposit Insurance Corporation and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1983 with Bank failures categories.
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.
The Gathering Crisis In Federal Deposit Insurance
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Author : Edward J. Kane
language : en
Publisher: Mit Press
Release Date : 1985-07-01
The Gathering Crisis In Federal Deposit Insurance written by Edward J. Kane and has been published by Mit Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1985-07-01 with Business & Economics categories.
The system of federal deposit insurance adopted during the 1930s has become increasingly costly and unreliable. This timely study warns bankers, regulators, politicians, and taxpayers that no matter how well the deposit-insurance system may have run in the past it is headed for an expensive bureaucratic breakdown. It forcefully argues that unless market discipline can be reintroduced, this breakdown threatens to take depository institutions into de facto nationalization. Reversing these trends, it points out, requires redesigning the deposit insurance system to curtail the subsidizing of risk taking by deposit institutions, a practice that has resulted in widespread insolvency among financial institutions.The Gathering Crisis in Federal Deposit Insurance provides more than a warning. It shows that the current system is unfair and has transformed the federal government into the chief supplier of equity funds to depository institutions. And it observes that whenever the financial environment is changing rapidly, the existing system of deposit insurance subsidizes risk-taking in ways that impose a huge, but largely unrecognized burden on the general taxpayer and conservatively managed financial institutions. In one way or another, the taxpayer is going to be called upon to make good the financially staggering amount of the system's guarantees.The book provides a comprehensive discussion of FDIC and FSLIC policies and procedures, describes the variety of risks facing deposit institutions and their implications for the insurance system, explains the perverse risk-bearing incentives inherent in the current deposit insurance system, documents the extent of actual insolvency at insured institutions, and proposes a framework for reform.Edward J. Kane is Everett Reese Professor of Banking and Monetary Economics, The Ohio State University. The Gathering Crisis in Federal Deposit Insurance is eleventh in the series, Regulation of Economic Activity, edited by Richard Schmalensee.
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.
Financial Stability In A Changing Environment
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Author : Zenta Nakajima
language : en
Publisher: Springer
Release Date : 2016-07-27
Financial Stability In A Changing Environment written by Zenta Nakajima and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-07-27 with Business & Economics categories.
In this book prominent academics and central bankers explore the framework for securing financial stability in a changing environment. The papers focus in particular on the following crucial issues for central banks and regulatory institutions around the world: (i) the implications of recent changes in the financial system worldwide for financial stability; (ii) an optimal design of prudential policy; and (iii) the relationship between the two ultimate goals of central banks - price stability and financial stability.
Deposit Insurance Around The World
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Author : Aslı Demirgüç-Kunt
language : en
Publisher: MIT Press
Release Date : 2008
Deposit Insurance Around The World written by Aslı Demirgüç-Kunt and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business & Economics categories.
Explicit deposit insurance (DI) is widely held to be a crucial element of modern financial safety nets. This book draws on an original cross-country dataset on DI systems and design features to examine the impact of DI on banking behavior and assess the policy complications that emerge in developing countries.
Design Structure And Implementation Of A Modern Deposit Insurance Scheme
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Author : Beat Bernet
language : en
Publisher:
Release Date : 2009
Design Structure And Implementation Of A Modern Deposit Insurance Scheme written by Beat Bernet and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
Contingency Approaches To Corporate Finance
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Author : Dan Galai
language : en
Publisher: World Scientific Publishing Company
Release Date : 2019-01-30
Contingency Approaches To Corporate Finance written by Dan Galai and has been published by World Scientific Publishing Company this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-01-30 with Corporations categories.
Black and Scholes (1973) and Merton (1974) (hereafter referred to as BSM) introduced the contingent claim approach (CCA) to the valuation of corporate debt and equity. The BSM modeling framework is also named the 'structural' approach to risky debt valuation. The CCA approach considers all stakeholders of the corporation as holding contingent claims on the assets of the corporation. Each claim holder has different priorities, maturities and conditions for payouts. It is based on the principle that all the assets belong to all the liability holders.In the structural approach the arrival of the default event relies on economic arguments for why firms default as it is explicitly related to the dynamics of the economic value of the firm. A standard structural model of default timing assumes that a corporation defaults when its assets drop to a sufficiently low level relative to its liabilities.The BSM modeling framework gives the basic fundamental version of the structural model where default is assumed to occur when the net asset value of the firm at the maturity of the pure-discount debt becomes negative, i.e., market value of the assets of the firm falls below the market value of the firm's liabilities. In a regime of limited liability, the shareholders of the firm have the option to default on the firm's debt. Equity can be viewed as a European call option on the firm's assets with a strike price equal to the face value of the firm's debt. Actually, CCA can be used to value all the components of the firm's liabilities. Option pricing models are used to value stocks, bonds, and many other types of corporate claims.Different versions of the model correspond to different assumptions about the conditions when a firm defaults. Merton (1974) assumes that the firm only defaults at the maturity date of the firm's outstanding debt when the net asset value of the firm, in market value terms, is negative. Others introduce other conditions for default. Also, different authors introduce more complicated capital structure with different kinds of bonds (e.g. senior and junior), warrants, corporate taxes, ESOP, and more. Volume 1: Foundations of CCA and Equity ValuationVolume 1 presents the seminal papers of Black and Scholes (1973) and Merton (1973, 1974). This volume also includes papers that specifically price equity as a call option on the corporation. It introduces warrants, convertible bonds and taxation as contingent claims on the corporation. It highlights the strong relationship between the CCA and the Modigliani-Miller (M&M) Theorems, and the relation to the Capital Assets Pricing Model (CAPM). Volume 2: CCA Approach to Corporate Debt ValuationVolume 2 concentrates on corporate bond valuation by introducing various types of bonds with different covenants as well as introducing various conditions that trigger default. While empirical evidence indicates that the simple Merton's model underestimates the credit spreads, additional risk factors like jumps can be used to resolve it. Volume 3: Issues in Corporate Finance with CCA ApproachVolume 3 includes papers that look at issues in corporate finance that can be explained with the CCA approach. These issues include the effect of dividend policy on the valuation of debt and equity, the pricing of employee stock options and many other issues of corporate governance. Volume 4: CCA Approach to Banking and Financial IntermediationVolume 4 focuses on the application of the contingent claim approach to banks and other financial intermediaries. Regulation of the banking industry led to the creation of new financial securities (e.g., CoCos) and new types of stakeholders (e.g., deposit insurers).
Maintaining Financial Stability In Times Of Risk And Uncertainty
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Author : Behl, Abhishek
language : en
Publisher: IGI Global
Release Date : 2018-12-04
Maintaining Financial Stability In Times Of Risk And Uncertainty written by Behl, Abhishek and has been published by IGI Global this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-12-04 with Business & Economics categories.
Risks and uncertainties?market, financial, operational, social, humanitarian, environmental, and institutional?are the inherent realities of the modern world. Stock market crashes, demonetization of currency, and climate change constitute just a few examples that can adversely impact financial institutions across the globe. To mitigate these risks and avoid a financial crisis, a better understanding of how the economy responds to uncertainties is needed. Maintaining Financial Stability in Times of Risk and Uncertainty is an essential reference source that discusses how risks and uncertainties affect the financial stability and security of individuals and institutions, as well as probable solutions to mitigate risk and achieve financial resilience under uncertainty. Featuring research on topics such as financial fraud, insurance ombudsman, and Knightian uncertainty, this book is developed for researchers, academicians, policymakers, students, and scholars.
Recommendations For Change In The Federal Deposit Insurance System
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Author : Cabinet Council on Economic Affairs (U.S.). Working Group
language : en
Publisher:
Release Date : 1985
Recommendations For Change In The Federal Deposit Insurance System written by Cabinet Council on Economic Affairs (U.S.). Working Group and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1985 with Banks and banking categories.