Deposit Insurance Around the Globe: Where Does it Work?
Edward J. Kane
Boston College - Department of Finance; National Bureau of Economic Research (NBER)
World Bank - Financial and Private Sector Development
NBER Working Paper No. w8493
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.
Number of Pages in PDF File: 38working papers series
Date posted: September 29, 2001
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