Chu, Kam Hon - In: Review of Economic Analysis : REA 13 (2021) 3, pp. 253-291
Based on Becker, Kane, Niskanen, and Peltzman's ideas, we develop a model to explain why deposit insurance is adopted even though policymakers are aware of its pitfalls in both theory and practice. In our model, the regulator acts as both a bureaucrat and an entrepreneur to maximize his...