TY - JOUR
T1 - Alternative forms of deposit insurance. Pricing and bank incentive issues
AU - Pennacchi, George G.
N1 - Funding Information:
*This work is based on Chapter 2 of the author's 1984 Ph.D. thesis at M.I.T. Comments and suggestions by Stanley Fischer, Terry Marsh, Robert Merton, Jim Poterba, Julio Rotemberg and anonymous referees are much appreciated. Partial support for this research from a Sloan Foundation Grant is gratefully acknowledged. ~These reports are 'Deposit Insurance in a Changing Environment', Federal Deposit Insurance Corporation (1983), and 'Agenda for Reform', Federal Home Loan Bank Board (1983).
PY - 1987/6
Y1 - 1987/6
N2 - This paper derives formulas for a deposit insuring agency's liability (and hence a fair value deposit insurance premium) and the equilibrium value of bank equity, considering a wide variety of factors affecting individual bank risk. Both fixed rate and variable rate (risk-sensitive) insurance systems are analyzed. Consideration is made as to whether the deposit insuring agency makes direct payments to depositors or arranges mergers following bank closings. The effect of these various policy choices on banks' incentive for risk taking is also analyzed.
AB - This paper derives formulas for a deposit insuring agency's liability (and hence a fair value deposit insurance premium) and the equilibrium value of bank equity, considering a wide variety of factors affecting individual bank risk. Both fixed rate and variable rate (risk-sensitive) insurance systems are analyzed. Consideration is made as to whether the deposit insuring agency makes direct payments to depositors or arranges mergers following bank closings. The effect of these various policy choices on banks' incentive for risk taking is also analyzed.
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U2 - 10.1016/0378-4266(87)90054-9
DO - 10.1016/0378-4266(87)90054-9
M3 - Article
AN - SCOPUS:38249037293
SN - 0378-4266
VL - 11
SP - 291
EP - 312
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
IS - 2
ER -