Deposit Insurance Coverage, Ownership, and Banks' Risk-Taking in Emerging Markets
By A. Angkinand, Clas Wihlborg. 2010
196 citations recorded by the source corpus.
We ask how deposit insurance systems and ownership of banks affect the degree of market discipline on banks' risk-taking. Market discipline is determined by the extent of explicit deposit insurance, as well as by the credibility of non-insurance of groups of depositors and other creditors. Furthermore, market discipline depends on the ownership structure of banks and the responsiveness of bank managers to market incentives. An expected U-shaped relationship between explicit deposit insurance coverage and banks' risk-taking is influenced by country specific institutional factors, including bank ownership. We analyze specifically how government ownership, foreign ownership and shareholder rights affect the disciplinary effect of partial deposit insurance systems in a cross-section analysis of industrial and emerging market economies, as well as in emerging markets alone. The coverage that maximizes market discipline depends on country-specific characteristics of bank governance. This "risk-minimizing" deposit insurance coverage is compared to the actual coverage in a group of countries in emerging markets in Eastern Europe and Asia.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/93ff815533c092c98ce8e7ce6aab79b5f98a49b6
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In Accounting
- Wenxuan Hou
- Michael Firth
- Yizhe Dong
- Chao Meng
- Gary Gang Tian
- Xiaofei Pan
- Lars Helge Haß
- Oliver M. Rui
In Finance
Citations in the corpus
- Ownership Structure and Risk-Taking: Comparative Evidence from Private and State-Controlled Banks in China (2014, methodology): “…with lower efficiency (Fries and Taci, 2005; Bonin et al., 2005), inferior long-term performance (Berger et al., 2005), greater risk taking (Angkinand and Wihlborg, 2010; Iannotta et al., 2007, 2013), and less prudent 1 Firth et al. (2009) find evidence that political connections play a…”