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Can Deposit Insurance Increase the Risk of Bank Failure? Some Historical Evidence

Year: 1994

Type: article

Abstract: Many economists have argued that unless premiums are risk-based, deposit insurance will encourage banks to take greater risks than they otherwise would, thereby increasing the likelihood of failure. Because virtually all banks today are insured, isolating the effects of deposit insurance from other regulatory and economic conditions that affect bank performance is problematic.

DOI: 10.20955/r.76.57-71

Authors: David C. Wheelock, Paul Wilson

Institutions: Federal Reserve Bank of St. Louis, The University of Texas at Austin

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: gold

OpenAlex ID: W1571897259

FWCI: 3.817

Cites: 23

Cited by: 39

Related to: 10