Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104165
Authors: 
Klüh, Ulrich
Year of Publication: 
2005
Series/Report no.: 
Munich Discussion Paper 2005-12
Abstract: 
Recent econometric evidence has noticeably changed views on the desirability and the appropriate design of explicit Deposit Insurance Schemes (DIS). The purpose of this paper is to take a second look at the data. After surveying recent empirical work and providing a theoretical framework, we argue that existing studies may suffer from a selection bias. Building on a new database on explicit deposit insurance compiled by the author, we perform a variety of semi-parametric and parametric tests to see whether and how explicit deposit insurance (de)stabilizes banking systems. We find that the evidence indeed suggests that a selection bias is present. Controlling for this bias leads to a reassessment of recent studies. In particular, making deposit insurance explicit has a rather moderate and, if any, stabilizing effect on the probability of experiencing a systemic crisis.
Subjects: 
Deposit Insurance
Banking Fragility
Systemic Risk
JEL: 
C14
G21
G28
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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