Ramos, Alberto M. - Federal Reserve Bank of Chicago - 1996
have been extremely expensive to do so. In order to calm depositors' fears, bank managers increased the share of liquid … deposit insurance policies. I derive six propositions characterizing bank risk-taking and portfolio composition under three … different deposit insurance arrangements: (i) Fixed-rate (FDIC type), (ii) Actuarially fair, and, Bank-neutral. Banks would …