Deposit Insurance and Crisis Management

ByG. G. Garcia

March 1, 2000

Download PDF

More Formats on IMF eLibrary

Order a Print Copy

More formats on IMF eLibrary

Order a Print Copy

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

A well-designed deposit insurance system (DIS) will provide incentives for citizens to keep the financial system sound. However, a poorly designed DIS can foster a financial crisis. This paper, therefore, makes recommendations for creating and running a limited, incentive-compatible, DIS. The paper also examines factors in the decision to grant, temporarily, a comprehensive guarantee, and the design of that guarantee, should a systemic financial crisis nevertheless occur. It concludes with guidance on the removal of that guarantee.

Subject: Bank deposits, Bank resolution, Banking, Commercial banks, Deposit insurance, Distressed institutions, Financial crises, Financial institutions, Financial sector policy and analysis, Financial services, Moral hazard

Keywords: adverse selection, Bank deposits, bank loss, Bank resolution, banking industry, banking system, Commercial banks, comprehensive guarantee, Deposit insurance, failed bank, financial backing, financial system, flight to quality, franchise value, full guarantee, Global, insurance fund, Moral hazard, problem bank, subordinated debt-holder, unguaranteed credit rating, WP

Pages:
80
Volume:
2000
DOI:
https://doi.org/10.5089/9781451847765.001
Issue:
057
Series:
Working Paper No. 2000/057
Stock No:
WPIEA0572000
ISBN:
9781451847765
ISSN:
1018-5941

Loading component...

IMF’s Work

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

Loading component...

IMF Working Papers