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Deposit Insurance

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.

Conference
 
The results of this research project were presented at the
Deposit Insurance Conference (agenda, papers, database, conference video)

Researchers
  • Asli Demirguc-Kunt

Documents
You can also download other related documents. These include content-rich current outputs (updated document versions, miscellaneous documents and web pages).

Library

WPS5641Diagnosing development bottlenecks : China and IndiaLi, Wei; Mengistae, Taye; Xu, Lixin Colin2011/04
WPS3920Resolution of failed banks by deposit insurers : cross-country evidenceBeck, Thorsten; Laeven, Luc2006/05
WPS3628Deposit insurance around the world : a comprehensive databaseDemirguc-Kunt, Asli; Karacaovali, Baybars; Laeven, Luc2005/06
WPS2682Deposit insurance and financial developmentCull, Robert; Senbet, Lemma W.; Sorge, Marco2001/09
WPS2679Deposit insurance around the globe : where does it work?Demirguc-Kunt, Asl'; Kane, Edward J.2001/09
More...



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