publication . Article . Preprint . 2010

A hierarchical agency model of deposit insurance

Jonathan Carroll; Shino Takayama;
Open Access
  • Published: 01 Jan 2010 Journal: Annals of Finance, volume 10, pages 267-290 (issn: 1614-2446, eissn: 1614-2454, Copyright policy)
  • Publisher: Springer Science and Business Media LLC
This paper develops a hierarchical agency model of deposit insurance. The main purpose is to undertake a game theoretic analysis of the consequences of deposit insurance schemes and their effects on monitoring incentives for banks. Using this simple framework, we analyze both risk- independent and risk-dependent premium schemes along with reserve requirement constraints. The results provide policymakers with not only a better understanding of the effects of deposit insurance on welfare and the problem of moral hazard, but also the policy implications implied in the design of de- posit insurance schemes. Our finding is consistent with the empirical research on de...
Persistent Identifiers
ACM Computing Classification System: ComputingMilieux_LEGALASPECTSOFCOMPUTING
free text keywords: General Economics, Econometrics and Finance, Finance, Economics, Actuarial science, Empirical research, Comparative statics, Mathematical finance, Monitoring problem, Deposit insurance
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