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Deposit Insurance and Financial Development

2001; Linguagem: Inglês

10.1596/1813-9450-2682

1813-9450

Robert Cull, Lemma W. Senbet, Marco M. Sorge,

Global Financial Crisis and Policies

No AccessPolicy Research Working Papers21 Jun 2013Deposit Insurance and Financial DevelopmentAuthors/Editors: Robert Cull, Lemma W. Senbet, Marco SorgeRobert Cull, Lemma W. Senbet, Marco Sorgehttps://doi.org/10.1596/1813-9450-2682SectionsAboutPDF (0.1 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract:Do deposit insurance programs contribute to financial development? Yes, but only if the regulatory environment is sound. Cull, Senbet, and Sorge examine the effect of different design features of deposit insurance on long-run financial development, defined to include the level of financial activity, the stability of the banking sector, and the quality of resource allocation. Their empirical analysis is guided by recent theories of banking regulation that employ an agency framework. The authors examine the effect of deposit insurance on the size and volatility of the financial sector in a sample of 58 countries. They find that generous deposit insurance leads to financial instability in lax regulatory environments. But in sound regulatory environments, deposit insurance does have the desired impact on financial development and growth. Thus countries introducing a deposit insurance scheme need to ensure that it is accompanied by a sound regulatory framework. Otherwise, the scheme will likely lead to instability and deter financial development. In weak regulatory environments, policymakers should at least limit deposit insurance coverage. This paper—a product of Finance, Development Research Group—is part of a larger effort in the group to design financial safety nets for developing countries. The study was funded by the Bank's Research Support Budget under the research project "Deposit Insurance" (RPO 682-90). Robert Cull may be contacted at [email protected] Previous bookNext book FiguresreferencesRecommendeddetailsCited byThe non‐payout functions of deposit insurance schemesInternational Journal of Finance & Economics, Vol.27, No.21 September 2020Banking regulations: do they matter for performance?Journal of Banking Regulation, Vol.22, No.419 March 2021Banking Crises15 February 2018Determinants of European bank risk during financial crisisCogent Economics & Finance, Vol.5, No.120 March 2017Non‐bank financial institutions regulation and risk‐takingJournal of Financial Regulation and Compliance, Vol.20, No.4Developing a Framework for Effective Financial Crisis ManagementSSRN Electronic JournalBanking Crises1 December 2016The impact of bank regulations, supervision, market structure, and bank characteristics on individual bank ratings: A cross-country analysisReview of Quantitative Finance and Accounting, Vol.27, No.4How accounting and auditing systems can counteract risk-shifting of safety-nets in banking: Some international evidenceJournal of Financial Stability, Vol.1, No.4Bank regulation and risk-taking incentives: An international comparison of bank riskJournal of Banking & Finance, Vol.29, No.5What kind of 'financial safety net' for Russia? Russian Banking reform in comparative contextPost-Communist Economies, Vol.16, No.2Financial Liberalization, Bank Crises and Growth: Assessing the LinksSSRN Electronic JournalLatin American Financial Development in PerspectiveSSRN Electronic JournalThe effect of deposit insurance on financial depth: A cross-country analysisThe Quarterly Review of Economics and Finance, Vol.42, No.4The Asian and European Banking Systems: The Case of Spain in the Quest for Development and StabilitySSRN Electronic JournalTransitioning from Blanket to Limited Deposit Guarantees in Asia: Issues for ThailandSSRN Electronic Journal View Published: September 2001 Copyright & Permissions Related RegionsAfricaEurope and Central AsiaRelated CountriesCzech RepublicTimor-LesteRelated TopicsFinance and Financial Sector DevelopmentLaw and DevelopmentPrivate Sector Development KeywordsBANKBANKINGBANKING REGULATIONBANKING SECTORBANKING SYSTEMBANKSDEPOSIT INSURANCEDEPOSIT INSURANCE SCHEMESFINANCIAL STABILITYGOVERNMENTSINSURANCE DESIGNINTERESTINTEREST RATESMARKET DISCIPLINEMORAL HAZARDREAL SECTORRESOURCE ALLOCATIONRISKSAVINGSSYSTEMIC INSTABILITY PDF downloadLoading ...