Deposit Insurance and Bank Intermediation in the Long Run

摘要: This paper provides empirical evidence on the impact of deposit insurance growth bank intermediation in long run. We use a unique dataset capturing variety features across countries, such as coverage, premium structure, etc. and synthesize available information by means principal component indices. specifically addresses sample selection endogeneity concerns estimating generalized Tobit model both via maximum likelihood Heckman 2-step method. The construct is guided recent theories banking regulation that employ an agency framework. basic moral hazard problem incentive for depository institutions to engage excessively high-risk activities, relative socially optimal outcomes, order increase option value their guarantee. overall consistent with generous government-funded might have negative long-run stability intermediation, except countries where rule law well established supervisors are granted sufficient discretion independence from legal reprisals. Insurance requirements member banks, even when risk-adjusted, instead found little effect restraining banks' risk-taking behavior.