This article introduces a monopolistically competitive model of foreign lending in which both explicit and implicit fixed-premium deposit insurance increase the degree to which bank participation in relending to problem debtors falls below its globally optimal level. This provides a channel for...

Current discussions about deposit insurance reform center on issues such as the size of insurance premiums, the size of the fund, and the size of the coverage limits-all issues that reflect a concern with how to allocate the losses arising from bank failures. The authors of this article argue...

Deposit insurance was introduced in the United States during the Great Depression primarily to promote financial stability. Stability is enhanced because deposit insurance reduces the likelihood of a bank run. During its first four decades, deposit insurance appeared to work well as few banks...

Deposit insurance, while reducing the threat of bank runs, also lessens bankers’ incentives to control risks. Reforms of the deposit insurance system are necessary to discourage excessive risk taking such as characterized the recent S&L crisis. The adoption of market value accounting, early...

A crucial public policy issue is the need for reform of the nation’s deposit insurance system. This article discusses the role of deposit insurance and outlines some proposals for reform.

A history of the collapse of the savings and loan industry. The authors contend that FSLIC’s institutional structures, established decades ago, made a thrift crisis inevitable. Poorly designed incentive structures strongly encouraged regulators and thrift managers to delay proper action when...