Artikel Jurnal

Could good intentions backfire? An empirical analysis of the bank deposit insurance. E-Journal

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The recent financial crisis led to the expansion of deposit-insurance coverage in many countries. We develop a structural model of the banking market in which banks act as financial intermediaries between consumers who have funds and businesses that seek loans, and explore the implications of such policies for banks and depositors. Our results indicate the policy could erode market discipline and increase banks' moral hazard. As a result, banks extend their lending to riskier loans than they would have in the absence of the policy. We find this policy may even harm consumers. Moreover, market competition magnifies the lack of market discipline and induces additional moral hazard for excessive risk taking. Counterfactuals indicate banks may reduce their deposit interest rates by 2.7% in a duopoly market and almost triple their risk caps under the new policy. The estimated losses of depositors' welfare are equivalent to at least a 3.27% drop in deposit interest rates.

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Ketersediaan

Informasi Detail

Judul Seri

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No. Panggil

332.1 BAO c

Penerbit

: Institute for Operations Research and the Management Sciences., 2017

Deskripsi Fisik

301-319 hlm ; 19 lembar

Bahasa

English

ISBN/ISSN

0732-2399

Klasifikasi

332.1

Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

Vol. 36, Issue 2

Subjek

Perbankan

Info Detail Spesifik

Document Type: Article

Pernyataan Tanggungjawab

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Versi lain/terkait

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