The Incentive-Compatible Design of Deposit Insurance and Bank Failure Resolution: Concepts and Country Studies

29 Pages Posted: 20 Apr 2016

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Date Written: May 2003

Abstract

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

Beck, Thorsten, The Incentive-Compatible Design of Deposit Insurance and Bank Failure Resolution: Concepts and Country Studies (May 2003). World Bank Policy Research Working Paper No. 3043. Available at SSRN: https://ssrn.com/abstract=636405

Thorsten Beck (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

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