English, Article, Journal or magazine article edition: Optimal Regulation of a Fully Insured Deposit Banking System Xavier Freixas; Emmanuelle Gabillon

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Bookmark: http://trove.nla.gov.au/version/152889
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Optimal Regulation of a Fully Insured Deposit Banking System
Author
  • Xavier Freixas
  • Emmanuelle Gabillon
Physical Description
  • preprint
Notes
  • We analyze risk sensitive incentive compatible deposit insurance in the presence of private information when the market value of deposit insurance can be determined using Merton's (1997) formula. We show that, under the assumption that transferring funds from taxpayers to financial institutions has a social cost, the optimal regulation combines different levels of capital requirements combined with decreasing premia on deposit insurance. On the other hand, it is never efficient to require the banks to hold riskless assets, so that narrow banking is not efficient. Finally, chartering banks is necessary in order to decrease the cost of asymmetric information.
  • Regulation,mechanism design,deposit insurance pricing,capital requirements
  • RePEc:upf:upfgen:175
Language
  • English
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