The Political Economy of Deposit Insurance
The author uses a political economy framework to analyze cross-country differences in deposit insurance coverage. He finds supporting evidence of the significance of private interest theories in explaining coverage of deposit insurance. Deposit ins...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/03/4066087/political-economy-deposit-insurance http://hdl.handle.net/10986/14121 |
| Summary: | The author uses a political economy
framework to analyze cross-country differences in deposit
insurance coverage. He finds supporting evidence of the
significance of private interest theories in explaining
coverage of deposit insurance. Deposit insurance coverage is
significantly higher in countries where poorly capitalized
banks dominate the market and in countries where depositors
are poorly educated. The author does not find that coverage
is significantly related to political-institutional
variables, such as the degree of democracy or restraints on
the executive, or to proxies for the general level of
institutional development, such as per capita income or
property rights. These results provide evidence in support
of the private interest view, according to which risky banks
lobby for extensive coverage. |
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