Policymakers in individual countries frequently ask the World Bank for its opinion about what adjustments in deposit-insurance design might be desirable. In responding to inquiries of this sort, Bank staff are hampered by the absence of a professional consensus on main issues. Theoretical literature identifies alternative strategies for balancing the benefits and costs of deposit insurance. However, distressingly little effort has been devoted to assessing the empirical impact of deposit insurance design.
Using statistical analysis drawing on new data sources, this research project empirically analyzes the impact of deposit insurance on banks, on the stability of the banking system, and on the way a country's financial system evolves. Our ultimate purpose is to turn the considerable amount of theoretical work on financial regulation in developed countries into a tested body of theory that can support reliable policy recommendations about how to tailor deposit insurance design to the particular environments of developing countries. Policy advice given by Bank economists on deposit insurance design must be sensitive to variations in institutional starting points and transition costs. There is no one-size-fits-all solution to individual country problems of financial reform and development. We expect the results to significantly enhance our understanding of issues in deposit insurance design and improve Bank's policy advice in this area.
The results of this research project were presented at theDeposit Insurance Conference
(agenda, papers, database, conference video)
Policy Research Working Papers
For more policy research working papers from the World Bank's institutional archives, search here using author’s last name, title or working paper number (“wpsxxxx”).
|WPS5641||Diagnosing development bottlenecks : China and India||Li, Wei; Mengistae, Taye; Xu, Lixin Colin||2011/04|
|WPS3920||Resolution of failed banks by deposit insurers : cross-country evidence||Beck, Thorsten; Laeven, Luc||2006/05|
|WPS3628||Deposit insurance around the world : a comprehensive database||Demirguc-Kunt, Asli; Karacaovali, Baybars; Laeven, Luc||2005/06|
|WPS2682||Deposit insurance and financial development||Cull, Robert; Senbet, Lemma W.; Sorge, Marco||2001/09|
|WPS2679||Deposit insurance around the globe : where does it work?||Demirguc-Kunt, Asl'; Kane, Edward J.||2001/09|
|WPS2559||Deposit insurance as private club - Is Germany a model?||Beck, Thorsten||2001/02|
|WPS2441||Controlling the fiscal costs of banking crises||Honohan, Patrick; Klingebiel, Daniela||2000/09|
|WPS2453||Designing financial safety nets to fit country circumstances||Kane, Edward J.||2000/09|
|28106||Can emerging market bank regulators establish credible discipline? the case of Argentina, 1992-1999||Calomiris, Charles ; Powell, Andrew||2000/05|
|WPS2247||Does deposit insurance increase banking system stability? - an empirical investigation||Demirguc-Kunt, Asli; Detragiache, Enrica||1999/11|
|WPS2183||Market discipline and financial safety net design||Demirguc-Kunt, Asl1; Huizinga, Harry||1999/09|
|WPS2058||Do depositors punish banks for "bad" behavior? : market discipline in Argentina, Chile, and Mexico||Martinez Peria, Maria Soledad; Schmukler, Sergio L.||1999/02|