Deposit Insurance and Risk Taking

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dc.contributor.author ALLEN, Franklin
dc.contributor.author CARLETTI, Elena
dc.contributor.author LEONELLO, Agnese
dc.date.accessioned 2012-02-28T10:02:20Z
dc.date.available 2012-02-28T10:02:20Z
dc.date.issued 2011
dc.identifier.citation Oxford Review of Economic Policy, 2011, 27, 3, 464-478 en
dc.identifier.issn 1460-2121
dc.identifier.issn 0266-903X
dc.identifier.uri http://hdl.handle.net/1814/20655
dc.description.abstract We review the theory of deposit insurance, highlighting the underlying assumptions that were not satisfied during the recent financial crisis and that may have led to serious policy mistakes. In theoretical models, deposit insurance is mostly seen as an equilibrium selection device to avoid panic-based runs. In such a context, it is not drawn on and is thus costless and fully credible. However, if bank runs are linked to a fall in asset values, providing deposit insurance can be very costly and, as the case of Ireland has shown, can even threaten sovereign solvency. This perspective indicates a need for new research on the relation between bank failures, deposit insurance schemes, sovereign default, and currency depreciation, and for reforms of deposit insurance schemes. en
dc.language.iso en en
dc.relation.ispartof Oxford Review of Economic Policy en
dc.title Deposit Insurance and Risk Taking en
dc.type Article en
dc.identifier.doi 10.1093/oxrep/grr022
dc.neeo.contributor ALLEN|Franklin|aut|
dc.neeo.contributor CARLETTI|Elena|aut|EUI70001
dc.neeo.contributor LEONELLO|Agnese|aut|
dc.identifier.volume 27 en


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