Deposit Insurance and Bank Failure Resolution: Cross-Country Evidence
Deposit Insurance and Bank Failure Resolution: Cross-Country Evidence
This chapter focuses on how deposit insurers are involved in bank failure resolution, and how it is linked to bank risk. In this study, several indicators are considered. First are cross-country indicators of the responsibility of deposit insurers to intervene into banks. Second is the power that deposit insurers hold when deciding to either cancel or revoke the deposit insurance for one of their members. Lastly, the extent of the independence of deposit insurers from political pressure as well as their access to supervisory information are studied to see how these two features interact with the role of deposit insurers in bank failure resolution. Through the study, it is discovered that the role of deposit insurers in bank failure resolution encompasses a wide variation, and through regression analysis, deposit insurers play an important role in maintaining bank stability.
Keywords: deposit insurers, bank failure resolution, cross-country indicators, regression analysis, bank stability, bank risk
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