Bank Runs and Moral Hazard : A Review of Deposit Insurance
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 unint...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/548031537377082747/Bank-Runs-and-Moral-Hazard-A-Review-of-Deposit-Insurance http://hdl.handle.net/10986/30444 |
| Summary: | 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. |
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