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

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Author Info
Beck, Thorsten
Laeven, Luc

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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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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3920.

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Date of creation: 01 May 2006
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Handle: RePEc:wbk:wbrwps:3920

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Related research
Keywords: Banks&Banking Reform; Financial Crisis Management&Restructuring; Financial Intermediation; Corporate Law; Insurance&Risk Mitigation;

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Beck, Thorsten, 2008. "Bank competition and financial stability : friends or foes ?," Policy Research Working Paper Series 4656, The World Bank. [Downloadable!]
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