https://tobybaxendale.com/wp-content/uploads/2011/09/stability.jpg 245 620 toby2021 http://tobybaxendale.com/wp-content/uploads/2021/03/toby-2021-logo.png toby20212011-09-21 12:10:162011-09-21 12:10:16How Deposit Insurance Reduces Financial Stability
How Deposit Insurance Reduces Financial Stability
Andrew Lilico has written a great article for The Telegraph on the dangers of deposit insurance:
In a classic 2005 paper from the highly authoritative Journal of Monetary Economics, Asli Demirgüç-Kunt and Enrica Detragiache investigated the question “Does Deposit Insurance Increase Banking System Stability?“ Their answer, based on an empirical study of a large panel of countries from 1980 to 1997, was that it does not; in fact, as they put it: “explicit deposit insurance tends to be detrimental to bank stability”.
I recommend the whole article.