IDEAS home Printed from https://ideas.repec.org/h/chb/bcchsb/v07c12pp345-358.html
   My bibliography  Save this book chapter

Deposit Insurance: Handle with Care

In: Banking Market Structure and Monetary Policy

Author

Listed:
  • Asli Demirgüç-Kunt

    (Banco Mundial)

  • Edward J. Kane

    (Boston Collegue)

Abstract

Explicit deposit insurance has been spreading rapidly in the past decades, most recently to countries with low levels of financial and institutional development. This paper documents the extent of crosscountry differences in deposit-insurance design and reviews empirical evidence on how particular design features affect private market discipline, banking stability, financial development, and the effectiveness of crisis resolution. This evidence challenges the wisdom of encouraging countries to adopt explicit deposit insurance without first stopping to assess and remedy weaknesses in their informational and supervisory environments. The paper also includes recommendations for reforming the Chilean deposit insurance system based on the results of the research reviewed here.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Asli Demirgüç-Kunt & Edward J. Kane, 2004. "Deposit Insurance: Handle with Care," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Antonio Ahumada & J. Rodrigo Fuentes & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking Market Structure and Monetary Policy, edition 1, volume 7, chapter 12, pages 345-358, Central Bank of Chile.
  • Handle: RePEc:chb:bcchsb:v07c12pp345-358
    as

    Download full text from publisher

    File URL: https://si2.bcentral.cl/public/pdf/banca-central/pdf/v7/345_358Demirguc-Kane.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Honohan, Patrick & Klingebiel, Daniela, 2003. "The fiscal cost implications of an accommodating approach to banking crises," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1539-1560, August.
    2. Asli Demirguc-Kunt & Edward J. Kane, 2002. "Deposit Insurance Around the Globe: Where Does It Work?," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 175-195, Spring.
    3. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    4. Armen Hovakimian & Edward Kane & Luc Laeven, 2003. "How Country and Safety-Net Characteristics Affect Bank Risk-Shifting," Journal of Financial Services Research, Springer;Western Finance Association, vol. 23(3), pages 177-204, June.
    5. Kane, Edward J., 2000. "Designing financial safety nets to fit country circumstances," Policy Research Working Paper Series 2453, The World Bank.
    6. Demirguc-Kunt, Asli & Huizinga, Harry, 2004. "Market discipline and deposit insurance," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 375-399, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bolzico, Javier & Mascaro, Yira & Granata, Paola, 2007. "Practical guidelines for effective bank resolution," Policy Research Working Paper Series 4389, The World Bank.
    2. Schüler, Martin, 2003. "How Do Banking Supervisors Deal with Europe-wide Systemic Risk?," ZEW Discussion Papers 03-03, ZEW - Leibniz Centre for European Economic Research.
    3. K. Dimitrova & Nikolay Nenovsky, 2003. "Deposits insurance during EU accession," Post-Print halshs-00259788, HAL.
    4. Asli Demirguc-Kunt & Edward J. Kane, 2002. "Deposit Insurance Around the Globe: Where Does It Work?," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 175-195, Spring.
    5. Lucía Cuadro Sáez & Sonsoles Gallego Herrero & Alicia García Herrero, 2003. "Why Do Countries Develop More Financially Than Others? The Role Of The Central Bank And Banking Supervision," Finance 0304006, University Library of Munich, Germany.
    6. Robert A. Eisenbeis, 2004. "Agency problems and goal conflicts," FRB Atlanta Working Paper 2004-24, Federal Reserve Bank of Atlanta.
    7. Friedrich Heinemann & Martin Schüler, 2004. "A Stiglerian View on Banking Supervision," Public Choice, Springer, vol. 121(1), pages 99-130, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Demirguc-Kunt, Asli & Kane, Edward J. & Laeven, Luc, 2006. "Deposit insurance design and implementation : policy lessons from research and practice," Policy Research Working Paper Series 3969, The World Bank.
    2. Beck, Thorsten & Laeven, Luc, 2006. "Resolution of failed banks by deposit insurers : cross-country evidence," Policy Research Working Paper Series 3920, The World Bank.
    3. Hoggarth, Glenn & Jackson, Patricia & Nier, Erlend, 2005. "Banking crises and the design of safety nets," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 143-159, January.
    4. Kathryn L. Dewenter & Alan C. Hess & Jonathan Brogaard, 2018. "Institutions and Deposit Insurance: Empirical Evidence," Journal of Financial Services Research, Springer;Western Finance Association, vol. 54(3), pages 269-292, December.
    5. Demirgüç-Kunt, Asli & Kane, Edward J. & Laeven, Luc, 2008. "Determinants of deposit-insurance adoption and design," Journal of Financial Intermediation, Elsevier, vol. 17(3), pages 407-438, July.
    6. Chernykh, Lucy & Cole, Rebel A., 2011. "Does deposit insurance improve financial intermediation? Evidence from the Russian experiment," Journal of Banking & Finance, Elsevier, vol. 35(2), pages 388-402, February.
    7. Imai, Masami, 2019. "Regulatory responses to banking crisis: Lessons from Japan," Global Finance Journal, Elsevier, vol. 39(C), pages 10-16.
    8. Osili, Una Okonkwo & Paulson, Anna, 2014. "Crises and confidence: Systemic banking crises and depositor behavior," Journal of Financial Economics, Elsevier, vol. 111(3), pages 646-660.
    9. Beck, Thorsten, 2003. "The incentive-compatible design of deposit insurance and bank failure resolution : concepts and country studies," Policy Research Working Paper Series 3043, The World Bank.
    10. Asli Demirgüç-Kunt & Luis Servén, 2010. "Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro- and Financial Policies," The World Bank Research Observer, World Bank, vol. 25(1), pages 91-124, February.
    11. Repullo, Rafael, 2004. "Policies for Banking Crises: A Theoretical Framework," CEPR Discussion Papers 4727, C.E.P.R. Discussion Papers.
    12. International Association of Deposit Insurers, 2021. "Deposit Insurance Coverage Level and Scope," IADI Research Papers 21-12, International Association of Deposit Insurers.
    13. Armen Hovakimian & Edward Kane & Luc Laeven, 2003. "How Country and Safety-Net Characteristics Affect Bank Risk-Shifting," Journal of Financial Services Research, Springer;Western Finance Association, vol. 23(3), pages 177-204, June.
    14. Viral V. Acharya & Thomas Cooley & Matthew Richardson & Ingo Walter, 2011. "Market Failures and Regulatory Failures : Lessons from Past and Present Financial Crises," Finance Working Papers 23273, East Asian Bureau of Economic Research.
    15. Steve BILLON & Natalia ANDRIES, 2023. "Deposit insurance pricing and monetary policy transmission," Working Papers of LaRGE Research Center 2023-03, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    16. Hoque, Hafiz & Andriosopoulos, Dimitris & Andriosopoulos, Kostas & Douady, Raphael, 2015. "Bank regulation, risk and return: Evidence from the credit and sovereign debt crises," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 455-474.
    17. Anginer, Deniz & Demirguc-Kunt, Asli & Zhu, Min, 2014. "How does deposit insurance affect bank risk? Evidence from the recent crisis," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 312-321.
    18. Schröder, Michael & Riedler, Jesper & Jaroszek, Lena & Lang, Gunnar & Hommel, Paul & Voll, Sebastian Simon, 2011. "Assessment of the cumulative impact of various regulatory initiatives on the European banking sector: Study," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 110523.
    19. Bolzico, Javier & Mascaro, Yira & Granata, Paola, 2007. "Practical guidelines for effective bank resolution," Policy Research Working Paper Series 4389, The World Bank.
    20. Demirguc-Kunt, Asli, 2006. "Finance and economic development : policy choices for developing countries," Policy Research Working Paper Series 3955, The World Bank.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chb:bcchsb:v07c12pp345-358. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alvaro Castillo (email available below). General contact details of provider: https://edirc.repec.org/data/bccgvcl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.