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Determinants of deposit-insurance adoption and design

Author

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  • Demirguc-Kunt, Asli
  • Kane, Edward J.
  • Laeven, Luc

Abstract

The authors seek to identify factors that influence decisions about a country's financial safety net, using a new dataset on 170 countries covering the 1960-2003 period. Specifically, they focus on how outside influences, economic development, crisis pressures, and political institutions affect deposit insurance adoption and design. Controlling for the influence of economic characteristics and events such as macroeconomic shocks, occurrence and severity of crises, and institutional development, they find that pressure to emulate developed-country regulatory frameworks and power-sharing political institutions dispose a country toward adopting design features that inadequately control risk-shifting.

Suggested Citation

  • Demirguc-Kunt, Asli & Kane, Edward J. & Laeven, Luc, 2006. "Determinants of deposit-insurance adoption and design," Policy Research Working Paper Series 3849, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3849
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    More about this item

    Keywords

    Banks&Banking Reform; Economic Theory&Research; Financial Intermediation; Insurance&Risk Mitigation; Financial Crisis Management&Restructuring;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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