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Bank Runs and Moral Hazard : A Review of Deposit Insurance

Author

Listed:
  • Anginer,Deniz
  • Demirguc-Kunt,Asli

Abstract

Deposit insurance is a widely adopted policy to promote financial stability in the banking sector. Deposit insurance helps ensure depositors'confidence in the financial system and prevents contagious bank runs, but it also comes with an unintended consequence of encouraging banks to take on excessive risk. This paper reviews the economic costs and benefits of deposit insurance and highlights the importance of institutions and specific design features for how well deposit insurance schemes work in practice.

Suggested Citation

  • Anginer,Deniz & Demirguc-Kunt,Asli, 2018. "Bank Runs and Moral Hazard : A Review of Deposit Insurance," Policy Research Working Paper Series 8589, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8589
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    Citations

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    Cited by:

    1. Samarasinghe, Ama & Uylangco, Katherine, 2021. "An examination of the effect of stock market liquidity on bank market power," International Review of Financial Analysis, Elsevier, vol. 77(C).
    2. Mihaela Tofan, 2022. "A Regulatory Perspective on the Actual Challenges for the European Deposit Insurance Scheme," Laws, MDPI, vol. 11(5), pages 1-13, October.
    3. Oosthuizen, Dick & Zalla, Ryan, 2022. "Funding deposit insurance," Working Paper Series 2704, European Central Bank.
    4. Rieder, Kilian, 2022. "Monetary policy decision-making by committee: Why, when and how it can work," European Journal of Political Economy, Elsevier, vol. 72(C).
    5. Deniz Anginer & Ata Can Bertay, 2019. "Deposit Insurance," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(01), pages 03-08, May.
    6. repec:ces:ifodic:v:17:y:2019:i:1:p:50000000005871 is not listed on IDEAS
    7. Godspower-Akpomiemie, Euphemia & Ojah, Kalu, 2021. "Market discipline, regulation and banking effectiveness: Do measures matter?," Journal of Banking & Finance, Elsevier, vol. 133(C).
    8. Atasoy, Burak Sencer & Özkan, İbrahim & Erden, Lütfi, 2024. "The determinants of systemic risk contagion," Economic Modelling, Elsevier, vol. 130(C).
    9. International Association of Deposit Insurers, 2020. "Evaluation of Differential Premium Systems for Deposit Insurance," IADI Research Papers 20-06, International Association of Deposit Insurers.
    10. Chen, Wang & Zhang, Zhiwen & Hamori, Shigeyuki & Kinkyo, Takuji, 2021. "Not all bank systemic risks are alike: Deposit insurance and bank risk revisited," International Review of Financial Analysis, Elsevier, vol. 77(C).

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