The Use of Market Information in Pricing Deposit Insurance
AbstractThis paper argues that information about the value of the deposit-insurance guarantee is available from market- generated data. In the most favorable circumstances, one may construc t an unbiased estimate of the market value of the deposit guarantee. In less favorable circumstances, one can at least construct a lower bound against which estimates of deposit-insurance premia can be comp ared. Without deposit-insurance reforms, the total guarantee associat ed with federal deposit insurance includes the guarantee on insured d eposits, a conditional guarantee on uninsured deposits, and a conditi onal guarantee of the stockholders' residual claim on the future earn ings of the bank. Copyright 1987 by Ohio State University Press.
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Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 19 (1987)
Issue (Month): 4 (November)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
Other versions of this item:
- James B. Thomson, 1986. "The use of market information in pricing deposit insurance," Working Paper 8609, Federal Reserve Bank of Cleveland.
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- Ramon P. DeGennaro & James B. Thomson, 1994.
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9407, Federal Reserve Bank of Cleveland.
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- Kane, Edward J. & Yu, Min-Teh, 1996. "Opportunity cost of capital forbearance during the final years of the FSLIC mess," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(3), pages 271-290.
- Hwang, Dar-Yeh & Shie, Fu-Shuen & Wang, Kehluh & Lin, Jung-Chu, 2009. "The pricing of deposit insurance considering bankruptcy costs and closure policies," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1909-1919, October.
- Eccher, Elizabeth A. & Ramesh, K. & Thiagarajan, S. Ramu, 1996. "Fair value disclosures by bank holding companies," Journal of Accounting and Economics, Elsevier, vol. 22(1-3), pages 79-117, October.
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- William P. Osterberg & James B. Thomson, 1994. "Depositor preference and the cost of capital for insured depository institutions," Working Paper 9404, Federal Reserve Bank of Cleveland.
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