The Incentive-Compatible Design of Deposit Insurance and Bank Failure Resolution: Concepts and Country Studies
29 Pages Posted: 20 Apr 2016
Date Written: May 2003
Deposit insurance schemes and bank failure resolution systems are asked to fulfill conflicting public policy objectives: On the one hand, they are supposed to protect small depositors and prevent contagion risks from bank runs; on the other hand, they are supposed to minimize aggressive risk taking by banks. Beck discusses the incentive-compatible design and interaction of both components of the financial safety net and describes and compares three countries with different safety net arrangements - Brazil, Germany, and Russia.
This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to understand the effects of deposit insurance and bank failure resolution.
Keywords: Deposit insurance, Bank failure resolution, Brazil, Germany, Russia
JEL Classification: G21, G28, G30
Suggested Citation: Suggested Citation