Does Deposit Insurance Increase Banking System Stability?

Author/Editor:

Asli Demirgüç-Kunt ; Enrica Detragiache

Publication Date:

January 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This study analyzes panel data for 61 countries during 1980–97 and concludes that explicit deposit insurance tends to be detrimental to bank stability, the more so where bank interest rates are deregulated and the institutional environment is weak. Also, the adverse impact of deposit insurance on bank stability tends to be stronger when the coverage offered to depositors is extensive, when the scheme is funded, and when it is run by the government rather than by the private sector.

Series:

Working Paper No. 2000/003

Subject:

English

Publication Date:

January 1, 2000

ISBN/ISSN:

9781451841893/1018-5941

Stock No:

WPIEA0032000

Pages:

29

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