Bank Risk and Deposit Insurance
Arguing that a relatively high cost of deposit insurance indicates that a bank takes excessive risks, this article estimates the cost of deposit insurance for a large sample of banks in 14 economies to assess the relationship between the risk-takin...
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| Format: | Journal Article |
| Language: | English en_US |
| Published: |
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2002/01/17736930/bank-risk-deposit-insurance http://hdl.handle.net/10986/17187 |
| Summary: | Arguing that a relatively high cost of
deposit insurance indicates that a bank takes excessive
risks, this article estimates the cost of deposit insurance
for a large sample of banks in 14 economies to assess the
relationship between the risk-taking behavior of banks and
their corporate governance structure. The results suggest
that banks with concentrated ownership tend to take the
greatest risks, and those with dispersed ownership engage in
a relatively low level of risk taking. Moreover, as a proxy
for bank risk, the cost of deposit insurance has some power
in predicting bank distress |
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