Reciprocal Brokered Deposits and Bank Risk
CAMA Working Paper No. 15/2010
13 Pages Posted: 31 Aug 2010
Date Written: January 1, 2010
Economic theory predicts that reciprocal brokered deposits, by facilitating an extension of deposit insurance coverage, may exacerbate moral hazard and reduce market discipline for banks, permitting them to take more risk in various dimensions. Using a newly available dataset, this note explores empirical evidence related to that hypothesis.
Keywords: reciprocal brokered deposits, moral hazard, bank risk
JEL Classification: G21
Suggested Citation: Suggested Citation