A fixed-rate deposit insurance system provides a moral hazard for excessive risk taking and is not viable absent … turn, caused banks to- increase default risk through increases. in asset risk and reductions in capital. This hypothesis is …

probability of bank failure and the risk exposure of the deposit insurance fund. On the other hand, the utility … asset risk and can increase the probability of bank failure. ; In this paper, we show that this seeming inconsistency stems … of deposit insurance on the bank's opportunity set. As a result, the models commonly used in the utility …

from their stock (and bond) prices would take less risk than non-publicly traded banks because counterparties, borrowers …, and regulators could react to adverse public market signals against publicly traded banks. In comparing the credit risk …, earnings risk, capitalization, and failure risk between publicly traded and non-publicly traded banks, the evidence in this …

depend on the form of default risk. When private loans are enforceable, but there is the risk that the government will …