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How Deposit Insurance Affects Financial Depth
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Book Synopsis How Deposit Insurance Affects Financial Depth by : Robert J. Cull
Download or read book How Deposit Insurance Affects Financial Depth written by Robert J. Cull and published by World Bank Publications. This book was released on 1998 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: January 1998 Whether the adoption of explicit deposit insurance strengthens financial markets or weakens them depends on the circumstances in which it is adopted. Adopting it to counteract instability appears to have little (or negative) effect. Adopting it when government credibility and institutional development are high appears to have a positive effect on financial depth. Should we expect deposit insurance to have a positive effect on development of the financial sector? All insurance pools individual risks: premiums are paid into a fund from which losses are met. In most circumstances, a residual claimant to the fund (typically a private insurance company) loses money when losses exceed premiums. Claimants that underprice risk tend to go bankrupt. With most deposit insurance, however, the residual claimant is a government agency with very different incentives. If the premiums paid by member banks cannot cover current fund expenditures, the taxpayer makes up the shortfall. Facing little threat of insolvency, there is less incentive for administrative agencies to price risk accurately. In the United States, researchers have found that the combination of increasing competition in banking services and underpriced deposit insurance led to riskier banking portfolios without commensurate increases in bank capital. Deposit insurance may facilitate risk-taking, with negative consequences for the health of the financial system. On the positive side, insurance may give depositors increased confidence in the formal financial sector-which may decrease the likelihood of bank runs and increase financial depth. Indeed, simple bivariate correlations between explicit insurance and financial depth are positive. But when one also controls for income and inflation, that relationship disappears-in fact, the partial correlation between changes in subsequent financial depth and the adoption of explicit insurance is negative (and quite pronounced). Counterintuitive though it may be, that stylized fact may be partially explained by the political and economic factors that motivated the decision to establish an explicit scheme. The circumstances surrounding decisions about deposit insurance are associated with different movements in subsequent financial depth. Adopting explicit deposit insurance to counteract instability in the financial sector does not appear to solve the problem. The typical reaction to that type of decision has been negative, at least with regard to financial depth in the three years after the program's inception. Adopting explicit deposit insurance when government credibility and institutional development were high appears to have had a positive effect on financial depth. This paper-a product of the Development Research Group- part of a larger effort in the group to study the design, implementation, and effects of deposit insurance programs.
Book Synopsis Deposit Insurance and Financial Development by : Robert J. Cull
Download or read book Deposit Insurance and Financial Development written by Robert J. Cull and published by World Bank Publications. This book was released on 2001 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do deposit insurance programs contribute to financial developmen? Yes, but only if the regulatory environment is sound.
Book Synopsis How Deposit Insurance Affects Financial Depth (a Cross-Country Analysis). by : Robert Cull
Download or read book How Deposit Insurance Affects Financial Depth (a Cross-Country Analysis). written by Robert Cull and published by . This book was released on 2016 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Whether the adoption of e ...
Book Synopsis Does Deposit Insurance Promote Financial Depth? Evidence from the Postal Savings System During the 1920s by : Lee Davison
Download or read book Does Deposit Insurance Promote Financial Depth? Evidence from the Postal Savings System During the 1920s written by Lee Davison and published by . This book was released on 2016 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper tests whether deposit insurance promotes financial depth by influencing depositor behavior. To do so, we rely on two schemes operating in the U.S. during the 1920s: the Postal Savings System and the deposit insurance schemes that some states had adopted. We exploit the discontinuity in deposit insurance across state borders and compute changes in postal savings deposits in cities located along the borders of states that did and did not have deposit insurance. We examine the relative growth of postal savings deposits in pairs of border cities when bank suspensions occurred within a short radius (10, 20, and 30 miles). Our results indicate that, following a bank suspension within a 10-mile radius, deposits in postal savings offices located in the non-deposit insurance state increased by 16 percent more than deposits in the neighboring postal savings office located in the deposit insurance state. The magnitude of the effect declines with bank suspension distance. It disappears when deposit insurance is not in effect. Using county-level data, we find that deposit insurance is associated with a 56 percent increase in local banking capacity.
Author :United States. Congress. House. Committee on Banking and Financial Services. Subcommittee on Financial Institutions and Consumer Credit Publisher : ISBN 13 : Total Pages :594 pages Book Rating :4.F/5 ( download)
Book Synopsis Condition of Deposit Insurance Funds and the Impact of the Proposed Deposit Insurance Premium Reduction on the Bank and Thrift Industries by : United States. Congress. House. Committee on Banking and Financial Services. Subcommittee on Financial Institutions and Consumer Credit
Download or read book Condition of Deposit Insurance Funds and the Impact of the Proposed Deposit Insurance Premium Reduction on the Bank and Thrift Industries written by United States. Congress. House. Committee on Banking and Financial Services. Subcommittee on Financial Institutions and Consumer Credit and published by . This book was released on 1995 with total page 594 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Federal Deposit Insurance Corporation by : Federal Deposit Insurance Corporation
Download or read book Federal Deposit Insurance Corporation written by Federal Deposit Insurance Corporation and published by . This book was released on 1984 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Deposit Insurance by : Richard L. Fogel
Download or read book Deposit Insurance written by Richard L. Fogel and published by DIANE Publishing. This book was released on 1998-04 with total page 197 pages. Available in PDF, EPUB and Kindle. Book excerpt: Deposit insurance was initiated in the 1930s to help restore confidence in the banking system after thousands of banks failed and millions of dollars in deposits were lost during the Great Depression. In 1990, the federal government insured about $3 trillion in deposits in the nation1s banks, thrifts, and credit unions and has to date fulfilled its goal of maintaining the stability of the banking system. This report discusses issues associated with reforming the deposit insurance system, specifically changes to the system that will promote a safe, sound, and stable banking industry. Charts and tables.
Book Synopsis Crisis and Response by : Federal Deposit Insurance Corporation
Download or read book Crisis and Response written by Federal Deposit Insurance Corporation and published by . This book was released on 2018-03-06 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Crisis and Response: An FDIC History, 2008¿2013 reviews the experience of the FDIC during a period in which the agency was confronted with two interconnected and overlapping crises¿first, the financial crisis in 2008 and 2009, and second, a banking crisis that began in 2008 and continued until 2013. The history examines the FDIC¿s response, contributes to an understanding of what occurred, and shares lessons from the agency¿s experience.
Book Synopsis Does Deposit Insurance Increase Banking System Stability? by : Asl? Demirgüç-Kunt
Download or read book Does Deposit Insurance Increase Banking System Stability? written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 1999 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Explicit deposit insurance tends to be detrimental to bank stability-- the more so where bank interest rates are deregulated and the institutional environment is weak"--Cover.
Download or read book Senegal written by Patrick A. Imam and published by International Monetary Fund. This book was released on 2013-10-22 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This enhanced review of Senegal’s financial sector is one of several pilot reviews called for by the Executive Board in May 2012. The purpose of the reviews is to go beyond the traditional surveillance focus on banking system soundness and solvency by analyzing in more depth the interplay between financial development, macroeconomic and financial stability, and effectiveness of macroeconomic policies in low-income countries. Senegal is a member of the West African Economic and Monetary Union; a number of key macroeconomic and financial policies are designed and implemented at the union level. This study focuses on Senegal-specific issues. Another pilot study, to be prepared in the context of the next annual consultation on regional policies in early 2013, will focus on union-wide issues.
Download or read book FDIC Quarterly written by and published by . This book was released on 2009 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Effect of Deposit Insurance on Financial Institutions by : Jack L. Carr
Download or read book The Effect of Deposit Insurance on Financial Institutions written by Jack L. Carr and published by . This book was released on 1989 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :International Monetary Fund. Monetary and Capital Markets Department Publisher :International Monetary Fund ISBN 13 :1498321119 Total Pages :85 pages Book Rating :4.4/5 (983 download)
Book Synopsis Canada by : International Monetary Fund. Monetary and Capital Markets Department
Download or read book Canada written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2019-06-24 with total page 85 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly. However, macrofinancial vulnerabilities—notably, elevated household debt and housing market imbalances—remain substantial, posing financial stability concerns. Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance. The financial system would be able to manage severe macrofinancial shocks. Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario. Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment. Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable. This would help ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.
Book Synopsis How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter by : Gregorio Impavido
Download or read book How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter written by Gregorio Impavido and published by International Monetary Fund. This book was released on 2009-07 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: We use a calibrated multi-sector DSGE model to analyze the likely impact of oil windfalls on the Ghanaian economy, under alternative fiscal and monetary policy responses. We distinguish between the short-run impact, associated with demand-related pressures, and the medium run impact on competitiveness and growth. The impact on inflation and the real exchange rate could be moderate, especially if the fiscal authorities smooth oil-related spending or increase public spending's import content. However, a policy mix that results in both a fiscal expansion and the simultaneous accumulation of the foreign currency proceeds from oil as international reserves to offset the real appreciation would raise demand pressures and crowd-out the private sector. In the medium term, the negative impact on competitiveness resulting from "Dutch Disease" effects could be small, provided public spending increases the stock of productive public capital. These findings highlight the role of different policy responses, and their interaction, for the macroeconomic impact of oil proceeds.
Book Synopsis Insurance and Issues in Financial Soundness by : Nigel Davies
Download or read book Insurance and Issues in Financial Soundness written by Nigel Davies and published by International Monetary Fund. This book was released on 2003-07-01 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores insurance as a source of financial system vulnerability. It provides a brief overview of the insurance industry and reviews the risks it faces, as well as several recent failures of insurance companies that had systemic implications. Assimilation of banking-type activities by life insurers appears to be the key systemic vulnerability. Building on this experience and the experience gained under the FSAP, the paper proposes key indicators that should be compiled and used for surveillance of financial soundness of insurance companies and the insurance sector as a whole.
Book Synopsis Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance by : El Bachir Boukherouaa
Download or read book Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance written by El Bachir Boukherouaa and published by International Monetary Fund. This book was released on 2021-10-22 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.
Book Synopsis The Prudential Regulation of Banks by : Mathias Dewatripont
Download or read book The Prudential Regulation of Banks written by Mathias Dewatripont and published by . This book was released on 1994-12 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Prudential Regulation of Banks applies modern economic theory to prudential regulation of financial intermediaries. Dewatripont and Tirole tackle the key problem of providing the right incentives to management in banks by looking at how external intervention by claimholders (holders of equity or debt) affects managerial incentives and how that intervention might ideally be implemented. Their primary focus is the regulation of commercial banks and S&Ls, but many of the implications of their theory are also valid for other intermediaries such as insurance companies, pension funds, and securities funds. Observing that the main concern of the regulation of intermediaries is solvency (the relation between equity, debt, and asset riskiness), the authors provide institutional background and develop a case for regulation as performing the monitoring functions (screening, auditing, convenant writing, and intervention) that dispersed depositors are unable or unwilling to perform. They also illustrate the dangers of regulatory failure in a summary of the S&L crisis of the 1980s. Following a survey of banking theory, Dewatripont and Tirole develop their model of the capital structure of banks and show how optimal regulation can be achieved using capital adequacy requirements and external intervention when banks are violated. They explain how regulation can be designed to minimize risks of accounting manipulations and to insulate bank managers from macroeconomic shocks, which are beyond their control. Finally, they provide a detailed evaluation of the existing regulation and of potential alternatives, such as rating agencies, private deposit insurance, and large private depositors. They show that these reforms are, at best, a complement, rather than a substitute, to the existing regulation which combines capital ratios with external intervention in case of insolvency. The Prudential Regulation of Banks is part of the Walras Pareto Lectures, from the Universiy of Lausanne.
