Fixed-premium deposit insurance and international credit crunches
AbstractThis article introduces a monopolistically competitive model of foreign lending in which both explicit and implicit fixed-premium deposit insurance increase the degree to which bank participation in relending to problem debtors falls below its globally optimal level. This provides a channel for fixed-premium deposit insurance to inhibit credit extension in bad states, resulting in an increase in the expected default percentage and an increase in the expected burden on the deposit insurance institutions.
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Bibliographic InfoArticle provided by Federal Reserve Bank of San Francisco in its journal Economic Review.
Volume (Year): (1996)
Issue (Month): ()
Other versions of this item:
- Mark M. Spiegel, 1994. "Fixed-premium deposit insurance and international credit crunches," Working Papers in Applied Economic Theory 94-19, Federal Reserve Bank of San Francisco.
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