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Deposit insurance reform; or, deregulation is the cart, not the horse

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  • John H. Kareken

Abstract

This paper, originally published in the spring 1983 Quarterly Review, explains why flat-rate deposit insurance gives financial intermediaries an incentive to take on too much risk. It also discusses the purposes of deposit insurance and some ways reforms might serve those purposes. Three possible reforms are discussed: abolishing the insurance and requiring depository institutions to either hold safe assets or mark to market, reducing the deposit ceilings for insurance, and risk-adjusting the insurance premia. ; Originally published in Quarterly Review, Spring 1983

Suggested Citation

  • John H. Kareken, 1990. "Deposit insurance reform; or, deregulation is the cart, not the horse," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 14(Win), pages 3-11.
    • Handle: RePEc:fip:fedmqr:y:1990:i:win:p:3-11:n:v.14no.1
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    Cited by:

    1. Glenn Boyle & Richard Meade, 2008. "Intra-country regulation of share markets: does one size fit all?," European Journal of Law and Economics, Springer, vol. 25(2), pages 151-165, April.
    2. Glenn Boyle & Richard Meade, 2008. "Intra-country regulation of share markets: does one size fit all?," European Journal of Law and Economics, Springer, vol. 25(2), pages 151-165, April.
    3. Jacqueline Khorassani, 2000. "An empirical study of depositor sensitivity to bank risk," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 24(1), pages 15-27, March.
    4. repec:vuw:vuwscr:18951 is not listed on IDEAS

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    Keywords

    Deposit insurance;

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