Alternative Pricing Models of Deposit Insurance under Capital Forbearance
In this paper, we present alternative pricing models of deposit insurance under capital forbearance. The investment behavior of deposit insurance companies and moral hazard of banks are considered and numerical analysis is carried out. We find that If the premium rate reflects forecasting instead of merely assessing the liability in determining premium rate, and considering the effect of the relationship between deposits interest rate and insolvency risk of banks, this can help decrease this moral hazard created after the issuance of the insurance contract.
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Volume (Year): 3 (2009)
Issue (Month): 2 (April)
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- Kane, Edward J. & Hendershott, Robert, 1996.
"The federal deposit insurance fund that didn't put a bite on U.S. taxpayers,"
Journal of Banking & Finance,
Elsevier, vol. 20(8), pages 1305-1327, September.
- Edward J. Kane & Robert Hendershott, 1994. "The Federal Deposit Insurance Fund That Didn't Put A Bite on U.S. Tax Payers," NBER Working Papers 4648, National Bureau of Economic Research, Inc.
- Kane, Edward J., 1986. "Appearance and reality in deposit insurance: The case for reform," Journal of Banking & Finance, Elsevier, vol. 10(2), pages 175-188, June. Full references (including those not matched with items on IDEAS)
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