Deposit insurance, market discipline and bank risk

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Titel: Deposit insurance, market discipline and bank risk
Författare: Karas, Alexei ; Pyle, William ; Schoors, Koen
Institution: Bank of Finland
Avdelning / Enhet: Institute for Economies in Transition (BOFIT)
Serie: BOFIT Discussion Papers
Serienumber: 10/2019
Utgivningsår: 2019
Utgivningsdatum: 27.6.2019
Sidor: 28
Subject (yso): pankit; talletussuoja; riskit
Nyckelord: Bofit-kokoelma; Venäjä; riskinotto; moraalikato; pankkitoiminta
JEL: E65; G21; G28; P34
Andra nyckelord: risk taking; deposit insurance; market discipline; moral hazard; banks; Russia
Abstrakt: Using evidence from Russia, we explore the effect of the introduction of deposit insurance on bank risk. Drawing on within-bank variation in the ratio of firm deposits to total household and firm deposits, so as to capture the magnitude of the decrease in market discipline after the introduction of deposit insurance, we demonstrate for private, domestic banks that larger declines in market discipline generate larger increases in traditional measures of risk. These results hold in a difference-in-difference setting in which state and foreign-owned banks, whose deposit insurance regime does not change, serve as a control.
Licens: https://helda.helsinki.fi/bof/copyright


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