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Deposit Insurance in Times of Financial Crisis

Author

Listed:
  • Vesna Micajkova

    (NLB Tutunska Banka AD)

Abstract

The role of deposit insurance and the design features of deposit insurance systems are undergoing important changes in light of the 2008/9 global crisis. Changes were made in order to restore the public confidence in the banking system, stop widespread bank runs during the crisis and increase the stability of the financial system. The purpose of this paper is to present the changes in deposit insurance around the world as a result of the financial crisis of 2008. Three main changes will be observed: the raising of the maximum level of deposit insurance coverage, the elimination of coinsurance and changes in the speed of depositor's payout. Effects of these changes will be analyzed, and special emphasis will be laid on the deposit insurance system of the Republic of Macedonia. The changes in deposit insurance can affect the moral hazard problem, the premium assessment base and the potential financial commitment of the deposit insurance institution. Changes in the deposit insurance regulations of the Republic of Macedonia did not affect the premium assessment base, but the potential financial obligation of the deposit insurance institution was increased. Regarding the moral hazard problem mitigation, Deposit Insurance Fund - Skopje should consider risk-based premium introduction.

Suggested Citation

  • Vesna Micajkova, 2013. "Deposit Insurance in Times of Financial Crisis," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 11(2), pages 165-176.
    • Handle: RePEc:seb:journl:v:11:y:2013:i:2:p:165-176
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    File URL: http://www.asecu.gr/Seeje/issue21/issue21-micajkova.pdf
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    References listed on IDEAS

    as
    1. Beat Bernet & Susanna Walter, 2009. "Design, Structure and Implementation of a Modern Deposit Insurance Scheme," SUERF Studies, SUERF - The European Money and Finance Forum, number 2009/5 edited by Morten Balling, May.
    2. Konrad Szelag, 2009. "Recent Reforms of the Deposit Insurance System in the United States: Reasons, Results, and Recommendations for the European Union," NBP Working Papers 59, Narodowy Bank Polski.
    3. Ms. G. G. Garcia, 1999. "Deposit Insurance: A Survey of Actual and Best Practices," IMF Working Papers 1999/054, International Monetary Fund.
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    More about this item

    Keywords

    Financial Crisis; Deposit Insurance; Financial Stability;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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