Pricing of deposit insurance

By Luc Laeven. 2010

62 citations recorded by the source corpus.

Laeven aims to provide guidelines for the pricing of underpriced in many countries around the world, deposit insurance in different countries. He presents notably in several developing countries. More important, several methodologies that can be used to set his estimates suggest that many countries cannot afford benchmarks for the pricing level of deposit insurance in a deposit insurance. country, and quantifies how specific design features Deposit insurance is unlikely to be a viable option in a affect the cost of deposit insurance. country with weak banks and institutions. The author The author makes several contributions to our does not recommend a funded deposit insurance scheme, understanding of what drives the price of deposit but rather he argues that for countries that have adopted insurance. For example, he shows how risk or are adopting deposit insurance and have decided to diversification and risk differentiation within a deposit pre-fund it, pricing it as accurately as possible is insurance system can reduce the price of deposit important. insurance. Laeven also finds that deposit insurance is This paper-a product of the Financial Sector Strategy and Policy Department-is part of a larger effort in the department to study the costs and benefits of deposit insurance. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Rose Vo, room MC9-624, telephone 202-473-3722, fax 202-5222031, email address hvol@worldbank.org. Policy Research Working Papers are also posted on the Web at http:// econ.worldbank.org. The author may be contacted at llaeven@worldbank.org. July 2002. (69 pages) The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Produced by the Research Advisory Staff Pricing of Deposit Insurance

Subfields: Finance

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Citations in the corpus

How Does Deposit Insurance Affect Bank Risk? Evidence from the Recent Crisis (2012, methodology): “We follow Laeven and Levine (2009) to compute z-score which is an accounting based measure of bank risk commonly used in the literature.”
Systemic Risk Measures: The Simpler the Better? (2013, methodology): “Although this is a simplifi cation, given the bailout practices, this could be a reasonable a ssumption, as Laeven (2008) states.”