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The National Deposit Insurance System - A Market Institution at the Crossroads

Author

Listed:
  • Antoaneta Geala

    (Academia de Studii Economice / Facultatea de Finante, Asigurari, Banci si Burse de Valori)

Abstract

The safety net provided by deposit insurance systems gain heavily in weight at times of crisis. The correct set of such a cushion is critical to its effectiveness. While it helps to prevent bank runs, the severe market distortions are of great concern. The short term benefit of public confidence can be, far and away, offset by its long run negative effects consisting mainly in increased moral hazard, heavy public costs and impaired competition.

Suggested Citation

  • Antoaneta Geala, 2009. "The National Deposit Insurance System - A Market Institution at the Crossroads," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 1(1), pages 055-068, December.
    • Handle: RePEc:rfb:journl:v:01:y:2009:i:1:p:055-068
    as

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    References listed on IDEAS

    as
    1. Asli Demirgüç-Kunt & Luis Servén, 2010. "Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro- and Financial Policies," The World Bank Research Observer, World Bank, vol. 25(1), pages 91-124, February.
    2. repec:zbw:bofitp:2008_014 is not listed on IDEAS
    3. Demirgüç-Kunt, Asli & Kane, Edward J. & Laeven, Luc, 2008. "Determinants of deposit-insurance adoption and design," Journal of Financial Intermediation, Elsevier, vol. 17(3), pages 407-438, July.
    4. James B. Thomson & Walker F. Todd, 1990. "Rethinking and Living with the Limits of Bank Regulation," Cato Journal, Cato Journal, Cato Institute, vol. 9(3), pages 579-600, Winter.
    5. E Philip Davis, 2008. "Liquidity, Financial Crises and the Lender of Last Resort – How Much of a Departure is the Sub-prime Crisis?," RBA Annual Conference Volume (Discontinued), in: Paul Bloxham & Christopher Kent (ed.),Lessons from the Financial Turmoil of 2007 and 2008, Reserve Bank of Australia.
    6. Peresetsky, Anatoly, 2008. "Market Discipline and Deposit Insurance," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 11(3), pages 3-14.
    Full references (including those not matched with items on IDEAS)

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