Does a deposit insurance scheme induce moral hazard among bankers? Evidence from an experiment with bankers

The Moral Hazard Implications of Deposit Insurance: Theory and Evidence

From Builders to Bankers

The notion of business development as a partial cure to the economic condition of blacks is not a new one, but black leaders have never unanimously agreed that business ownership is an effective instrument of economic success. The violence and civil disorders of the 1960s, however, spurred strong interest in programs to develop and promote both urban black business and black-owned and controlle...

Can Risk-Based Deposit Insurance Premiums Control Moral Hazard?

C alls for deposit insurance reform regularly sound the refrain to make deposit insurance premiums more risk based.1 Those who support such a change believe that risk-based premiums will discourage insured banks from taking excessive risk because a bank facing higher premiums will think twice before undertaking a risky activity. This logic seems impeccable: Let banks face the true cost of risk ...

Ecology for bankers

‘Tipping points’, ‘thresholds and breakpoints’, ‘regime shifts’ — all are terms that describe the flip of a complex dynamical system from one state to another. For banking and other financial institutions, the Wall Street Crash of 1929 and the Great Depression epitomize such an event. These days, the increasingly complicated and globally interlinked financial markets are no less immune to such ...

Central Bankers and Uncertainty

For the majority of my professional life, I have had the good fortune to be simultaneously involved both as a participant in, and as an academic observer of, central banks. Today, and as is suitable for this occasion and audience, I shall be primarily emphasising my academic observations. Nevertheless, my study of central bank behaviour is inevitably informed and coloured by my previous years a...