Deposit Insurance: Theory, Policy and Evidence

Part 1 Banks and deposit insurance: banks as special firms bank runs and their costs bank failure and runs to other banks - the case for deposit insurance deposit insurance in a financial framework - deposit insurance, lender or last resort and deposit insurance. Part 2 The rationale for deposit insurance: deposit insurance and banking panics models - non-fundamental theory, fundamental theory systemic risk as source of financial instability - banks and the payment system, the magnitude of systemic risk the successful experience of clearinghouse associations. Part 3 The deposit insurance dilemma: the moral hazard problem - moral hazard toward risky assets, moral hazard towards capital adequacy the social cost of moral hazard regulation and supervision as responses to deposit insurance implicit insurance. Part 4 Coping with deposit insurance perverse effects: optimal deposit insurance design - pricing risk-adjusted deposit insurance, the cases against pricing insurance, macroeconomics issues on risk-adjusted deposit insurance market discipline solutions - sized based deposit insurance, maturity based partial deposit insurance, closure rule increased disclosure risk-based capital radical alternatives - private deposit insurance, the narrow banks. Part 5 Comparative analysis of deposit insurance schemes: Non-European countries - United States, Canada, Japan EEC countries - United Kingdom, Italy, France, West Germany, other EEC countries - Holland, Belgium, Spain.