The Use of Market Information in Pricing Deposit Insurance
This paper argues that information about the value of the deposit-insurance guarantee is available from market- generated data. In the most favorable circumstances, one may construc t an unbiased estimate of the market value of the deposit guarantee. In less favorable circumstances, one can at least construct a lower bound against which estimates of deposit-insurance premia can be comp ared. Without deposit-insurance reforms, the total guarantee associat ed with federal deposit insurance includes the guarantee on insured d eposits, a conditional guarantee on uninsured deposits, and a conditi onal guarantee of the stockholders' residual claim on the future earn ings of the bank. Copyright 1987 by Ohio State University Press.
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Volume (Year): 19 (1987)
Issue (Month): 4 (November)
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