Journal Article

The future of deposit insurance: an analysis of the alternatives

Abstract: Deposit insurance, while reducing the threat of bank runs, also lessens bankers incentives to control risks. Reforms of the deposit insurance system are necessary to discourage excessive risk taking such as characterized the recent S&L crisis. The adoption of market value accounting, early closing of failed banks, and exposing uninsured depositors and creditors to lossesall would give bankers less incentives to take excessive risks with insured deposits.

Keywords: Deposit insurance; Bank failures;

Access Documents


Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Economic Review

Publication Date: 1989

Volume: 75

Issue: May

Pages: 3-15