Determinants of Deposit-Insurance Adoption and Design

43 Pages Posted: 5 Jan 2005

See all articles by Asli Demirgüç-Kunt

Asli Demirgüç-Kunt

World Bank

Edward J. Kane

Boston College - Department of Finance; National Bureau of Economic Research (NBER)

Luc Laeven

European Central Bank (ECB); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: December 13, 2004

Abstract

This paper investigates the factors that determine a country's decision to adopt explicit deposit insurance using data on 170 countries over the 1960-2003 period. Specifically, we focus on the role played by outside influences and internal political factors both in adopting deposit insurance and crafting its design. Our results indicate that the desire to emulate developed-country regulatory brameworks, and having a more-democratic political system make adoption and generous design more likely, even after we control for a large number of country characteristics and events, such as macroeconomic shocks, occurrence and severity of crises, and institutional development.

Keywords: Deposit Insurance, Bank Regulation, Political Economy, Institutions

JEL Classification: G21, G28, P51

Suggested Citation

Demirgüç-Kunt, Asli and Kane, Edward J. and Laeven, Luc A., Determinants of Deposit-Insurance Adoption and Design (December 13, 2004). Available at SSRN: https://ssrn.com/abstract=644027 or http://dx.doi.org/10.2139/ssrn.644027

Asli Demirgüç-Kunt (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Edward J. Kane

Boston College - Department of Finance ( email )

Fulton Hall
Chestnut Hill, MA 02467
United States
520-299-5066 (Phone)
617-552-0431 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Luc A. Laeven

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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