Deposit Insurance: Obtaining the Benefits and Avoiding the Pitfalls

IMF Working Papers, August 1, 1996

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Deposit Insurance: Obtaining the Benefits and Avoiding the Pitfalls

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Bibliographic details

• Authors: G. G. Garcia
• Published: August 1, 1996
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451850499.001

Overview

• Author: G. G. Garcia
• Date: August 1, 1996
• Core focus: contrasts deposit protection with other forms of insurance; examines why goods and services receive warranties and guarantees; explores characteristics of deposits and banks that merit deposit insurance; analyzes reasons countries adopt deposit insurance systems; identifies pitfalls from poorly designed schemes; outlines features of schemes that successfully avoid pitfalls.
• Series: Working Paper No. 1996/083

Key findings (as described in the paper)

• Deposit protection differs from other forms of insurance because of the particular characteristics of deposits and banks.
• Warranties and guarantees are common across goods and services; the paper situates deposit insurance within this broader context.
• Countries adopt systems of deposit insurance for a variety of reasons; motivations and objectives vary.
• Poorly designed deposit insurance schemes can give rise to significant pitfalls and adverse outcomes.
• Schemes that incorporate certain design features can successfully avoid these pitfalls.

Pitfalls and risks highlighted

• Poor scheme design can create vulnerabilities and unintended consequences (general statement as articulated in the summary).
• Adverse selection is noted among the keywords as a relevant risk factor for deposit insurance arrangements.

Features of successful deposit insurance schemes

• The paper identifies features that allow a deposit insurance scheme to obtain benefits while avoiding pitfalls (summary-level statement; specific features are detailed in the paper itself).

Subjects and keywords

• Subject: Banking, Commercial banks, Deposit insurance, Distressed institutions, Financial crises, Financial institutions, Insurance, Insurance companies
• Keywords: adverse selection, Africa, bank closure law, bank competition, bank customer, bank owner, bank resource, bank supervisor, banking system, commercial bank, Commercial banks, Deposit insurance, deposit protection, deposit protection scheme, Distressed institutions, Europe, failed bank, Insurance, Insurance companies, insurance coverage, insurance fund, lending bank, protection scheme, WP

Disclaimer (as presented on the page)

• "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."

IMF Working Papers — Deposit Insurance: Obtaining the Benefits and Avoiding the Pitfalls (Working Paper No. 1996/083, G. G. Garcia)