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Resolution of failed banks by deposit insurers: Cross-country evidence

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  • Beck, T.H.L.

    (Tilburg University)

Abstract

There is a wide cross-country variation in the institutional structure of bank failure resolution, including the role of the deposit insurer. The authors use quantitative analysis for 57 countries and discuss specific country cases to illustrate this variation. Using data for over 1,700 banks across 57 countries, they show that banks in countries where the deposit insurer has the responsibility of intervening failed banks and the power to revoke membership in the deposit insurance scheme are more stable and less likely to become insolvent. Involvement of the deposit insurer in bank failure resolution thus dampens the negative effect that deposit insurance has on banks'risk taking.

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-3508404.

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Date of creation: 2008
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Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-3508404

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Web page: http://www.tilburguniversity.edu/

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References

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  1. Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-19, June.
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Citations

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Cited by:
  1. Gros, Daniel, 2013. "Principles of a Two-Tier European Deposit (Re-)Insurance System," CEPS Papers 7958, Centre for European Policy Studies.
  2. Matej Marinc & Razvan Vlahu, 2011. "The Economic Perspective of Bank Bankruptcy Law," DNB Working Papers 310, Netherlands Central Bank, Research Department.
  3. World Bank & International Monetary Fund, 2006. "Financial Sector Assessment Program Update : Republic of Poland - Credit, Growth, and Financial Stability," World Bank Other Operational Studies 16056, The World Bank.
  4. Gerhardt, Maria & Lannoo, Karel, 2011. "Options for reforming deposit protection schemes in the EU," ECRI Papers 4339, Centre for European Policy Studies.
  5. Saibal, Ghosh, 2009. "Charter Value and Risk-taking: Evidence from Indian Banks," MPRA Paper 19543, University Library of Munich, Germany.
  6. Frank Schmielewski & Thomas Wein, 2012. "Are private banks the better banks? An insight into the principal-agent structure and risk-taking behavior of German banks," Working Paper Series in Economics 236, University of Lüneburg, Institute of Economics.
  7. Distinguin, Isabelle & Kouassi, Tchudjane & Tarazi, Amine, 2013. "Interbank deposits and market discipline: Evidence from Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 544-560.
  8. Beck, Thorsten, 2008. "Bank competition and financial stability : friends or foes ?," Policy Research Working Paper Series 4656, The World Bank.

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