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Fairly Priced Deposit Insurance and Bank Charter Policy

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  • Craine, Roger

Abstract

The thrust of current deposit insurance reform--risk-based insurance premiums and capital requirements--is an effort to price deposit insurance more fairly. Fairly pricing deposit insurance eliminates inequitable wealth transfers but it does not lead to an efficient equilibrium. This paper shows that an alternative charter policy results in an efficient separating equilibrium. Copyright 1995 by American Finance Association.

Suggested Citation

  • Craine, Roger, 1995. " Fairly Priced Deposit Insurance and Bank Charter Policy," Journal of Finance, American Finance Association, vol. 50(5), pages 1735-1746, December.
  • Handle: RePEc:bla:jfinan:v:50:y:1995:i:5:p:1735-46
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    Cited by:

    1. Ari Hyytinen & Tuomas Takalo, 2004. "Preventing Systemic Crises through Bank Transparency," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 33(2), pages 257-273, July.
    2. Thakor, Anjan V., 1996. "The design of financial systems: An overview," Journal of Banking & Finance, Elsevier, vol. 20(5), pages 917-948, June.
    3. Williams, Barry, 2014. "Bank risk and national governance in Asia," Journal of Banking & Finance, Elsevier, vol. 49(C), pages 10-26.
    4. Paul H. Kupiec & James M. O'Brien, 1998. "Deposit insurance, bank incentives, and the design of regulatory policy," Economic Policy Review, Federal Reserve Bank of New York, issue Oct, pages 201-211.
    5. Ari Hyytinen & Tuomas Takalo, 2002. "Enhancing Bank Transparency: A Re-assessment," Review of Finance, European Finance Association, vol. 6(3), pages 429-445.
    6. David Bates & Roger Craine, 1998. "Valuing the Futures Market Clearinghouse's Default Exposure During the 1987 Crash," NBER Working Papers 6505, National Bureau of Economic Research, Inc.
    7. Laeven, Luc, 2002. "Pricing of deposit insurance," Policy Research Working Paper Series 2871, The World Bank.

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