While the first two pillars of the European Banking Union have been implemented, a European deposit insurance scheme (EDIS) is still not in place. To facilitate its introduction, recent proposals argue in favor of a reinsurance scheme. In this paper, we use a regime-switching open-economy DSGE...

Recent proposals for a still missing European deposit insurance scheme (EDIS) argue in favor of a reinsurance framework. In this paper, we use a regime-switching open-economy DSGE model with bank default to assess the relative efficiency of such a scheme. We find that reinsurance by EDIS is more...

Using data from Bangladesh, this paper finds that the liquidity premium—the difference between the interest paid on illiquid and liquid savings accounts—is higher in commercial banks than in microfinance institutions. One possible interpretation lies in the higher prevalence of...

Using data from Bangladesh, this article finds that the liquidity premium – the difference between the interest paid on illiquid and liquid savings accounts – is higher in commercial banks than in microfinance institutions. One possible interpretation lies in the higher prevalence of...

Using evidence from Russia, we explore the effect of the introduction of deposit insurance on bank risk. Drawing on variation in the ratio of firm deposits to total household and firm deposits before the announcement of deposit insurance, so as to capture the magnitude of the decrease in market...

Asset recovery rate is a key factor for credit investors. This study explores the determinants of bank asset recovery rates during the recent downturn in the real estate sector and subsequent financial crisis. We find that banks relying on brokered deposit realize lower asset recovery rates....

Combining deposit taking with credit line provision saves on the liquidity costs banks incur to meet the liquidity needs of consumers and corporations, but it exposes them to a risk of concurrent runs on their assets and liabilities. If a bank's financial condition deteriorates, depositors have...

The article examines the impact of endogenous deposits created by loans on the liquidity of a commercial bank. A developed discrete dynamic model of liquidity is based in particular on the application of a non-traditional indicator of turnover of liquid assets, namely, the ratio of debit...

Prior to the Great Depression, regulators imposed double liability on bank shareholders to ensure financial stability and protect depositors. Under double liability, shareholders of failing banks lost their initial investment and had to pay up to the par value of the stock in order to compensate...

In the aftermath of a financial crisis, policymakers often must determine how best to trade off future security from a similar crisis and future moral hazard. The more the government pledges to protect the value of the assets of financial institutions in a crisis, the greater the risks that...