Households' Deposit Insurance Coverage: Evidence and Analysis of Potential Reforms
J. OF MONEY, CREDIT, AND BANKING, Vol. 28 No. 3, August 1996
Posted: 2 Jul 1996
It is often suggested that reducing deposit insurance would reduce problems of moral hazard in the banking industry. However, little is known about likely effects of proposed reforms on household depositors. This study uses data from the Survey of Consumer Finances to examine the characteristics of household depositors, particularly those with uninsured funds. We find that large depositors tend to have substantial shares of their assets in insured depositories, yet often fail to keep their holdings within insurance limits. Various explanations for these facts are considered. We also simulate the effects of proposed reforms on the pool of uninsured depositors.
JEL Classification: G21, G22
Suggested Citation: Suggested Citation