An Analysis of the Factors that Influence the Adoption and Design of Deposit Insurance System

Abstract

Abstract:

This paper uses Weibull model, Cox proportional hazard model, Probit model and Heckman two-step model to study the public interest and private interest problems of deposit insurance adoption and design with the data of 189 countries and regions in 1960-2015 under the new influence factors and moral hazardous index system. The results show that the macroeconomic situation, banks' structure, business scope, banking supervision, political factors, legal system, population and external stress can affect different interests within a country for setting up deposit insurance system, and furthermore, they affect the possibility of adopting the deposit insurance system, the tolerance and the coverage limit of the scheme under the influence of the interaction of private and public interests.

Key words: political economics, public interests and private interests theory, hazard model, Heckman two step model

Chang Yiming, Zhao Shangmei, Yang Haijun, He Jiang, Hu Fei, Wu Jiang. An Analysis of the Factors that Influence the Adoption and Design of Deposit Insurance System[J]. , 2019, 31(11): 44-59.

References

[1] Chava S., Purnanandam A. The Effect of Banking Crisis on Bank-dependent Borrowers[J]. Journal of Financial Economics, 2011,99(1):116-135
[2] Demirgüç-Kunt A., Kane E. J., Laeven L. Determinants of Deposit-insurance Adoption and Design[J]. Journal of Financial Intermediation, 2008,17(3):407-438
[3] Egan M., Hortaçsu A., Matvos G. Deposit Competition and Financial Fragility:Evidence from the US Banking Sector[J]. American Economic Review, 2017,107(1):169-216
[4] Chang C. C., Ho R. J. Risk-Shifting Behavior at Commercial Banks with Different Deposit Insurance Assessments:Further Evidence from U.S. Markets[J]. Journal of Financial Research, 2017,40(1):55-80
[5] Diamond D. W., Dybvig P. H. Bank Runs, Deposit Insurance, and Liquidity[J]. Journal of Political Economy, 1983,91(3):401-419
[6] Jayaratne J., Strahan P. E. The Finance-Growth Nexus:Evidence from Bank Branch Deregulation[J]. The Quarterly Journal of Economics, 1996,111(3):639-670
[7] Kroszner R. S., Stratmann T. Interest-Group Competition and the Organization of Congress:Theory and Evidence from Financial Services'Political Action Committees[J]. The American Economic Review, 1998,88(5):1163-1187
[8] Laeven L. The Political Economy of Deposit Insurance[J]. Journal of Financial Services Research, 2004,26(3):201-224
[9] Calomiris C. W., Flandreau M., Laeven L. Political Foundations of the Lender of Last Resort:A Global Historical Narrative[J]. Journal of Financial Intermediation, 2016,28(9):48-65
[10] Anginer D., Demirguc-Kunt A., Zhu M. How does Deposit Insurance Affect Bank Risk?Evidence from the Recent Crisis[J]. Journal of Banking&Finance, 2014,48(1):312-321
[11] Knell M., Stix H. Trust in Banks during Normal and Crisis Times——Evidence from Survey Data[J]. Economica, 2015,82(1):995-1020
[12] Kroszner R. S., Strahan P. E. Obstacles to Optimal Policy:The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms[M]. Chicago:University of Chicago Press, 2001
[13] Calomiris C. W., Jaremski M. Deposit Insurance:Theories and Facts[J]. Annual Review of Financial Economics, 2016,8(1):97-120
[14] Shy O., Stenbacka R., Yankov V. Limited Deposit Insurance Coverage and Bank Competition[J]. Journal of Banking&Finance, 2016,71(1):95-108
[15] Liu L., Zhang G., Fang Y. Bank Credit Default Swaps and Deposit Insurance around the World[J]. Journal of International Money and Finance, 2016,69(1):339-363
[16] Bakir C. Fragile by Design:The Political Origins of Banking Crises And Scarce Credit[J]. Public Administration, 2015,93(3):828-830
[17] Andrievskaya I., Semenova M. Does Banking System Transparency Enhance Bank Competition?Cross-country Evidence[J]. Journal of Financial Stability, 2016,23(1):33-50
[18] Sealey C. W., Gandar J. M., Mazumdar S. C. Guaranty Funds and Moral Hazard in the Insurance Industry:A Theoretical Perspective[M]. New Delhi:Springer India, 2016
[19] Gropp R., Vesala J. Deposit Insurance, Moral Hazard and Market Monitoring[J]. Review of Finance, 2004,8(4):571-602
[20] Garcia G. G. H. Deposit Insurance:Actual and Good Practices[M]. Washington:International Monetary Fund, 2000
[21] Bao W., Ni J. Could Good Intentions Backfire?An Empirical Analysis of the Bank Deposit Insurance[J]. Marketing Science, 2017,36(2):301-319
[22] Dreyfus J. F., Saunders A., Allen L. Deposit Insurance and Regulatory Forbearance:Are Caps on Insured Deposits Optimal?[J]. Journal of Money, Credit and Banking, 1994,26(3):412-438
[23] Hasan I., Jackowicz K., Kowalewski O., et al. Do Local Banking Market Structures Matter for SME Financing and Performance?New Evidence from an Emerging Economy[J]. Journal of Banking&Finance, 2017,79(1):142-158
[24] Karwowski E., Stockhammer E. Financialisation in Emerging Economies:A Systematic Overview and Comparison with Anglo-Saxon Economies[J]. Economic and Political Studies, 2017,5(1):60-86
[25] Fernández A., Gulan A. Interest Rates, Leverage, and Business Cycles in Emerging Economies:The Role of Financial Frictions[J]. American Economic Journal:Macroeconomics, 2015,7(3):153-188
[26] Altug S., Kabaca S. Search Frictions, Financial Frictions, and Labor Market Fluctuations in Emerging Markets[J]. Emerging Markets Finance and Trade, 2017,53(1):128-149
[27] 王晓博,辛飞飞,冯净冰.存款保险制度下银行存贷业务道德风险的影响因素[J].管理评论, 2015,27(7):33-42
[28] Lin D. Y., Wei L. J. The Robust Inference for the Cox Proportional Hazards Model[J]. Journal of the American Statistical Association, 1989,84(408):1074-1078
[29] Cox D. R. Regression Models and Life-Tables[J]. Journal of the Royal Statistical Society Series B (Methodological), 1972,34(2):187-220
[30] Maechler A. M., McDill K. M. Dynamic Depositor Discipline in US Banks[J]. Journal of Banking&Finance, 2006,30(7):1871-1898
[31] 雷震,彭欢.银行业市场结构与中小企业的生成:来自中国1995-2006年的证据[J].世界经济, 2010,33(3):109-125
[32] Boyd J. H., De NicolÓ G. The Theory of Bank Risk Taking and Competition Revisited[J]. The Journal of Finance, 2005,60(3):1329-1343
[33] Morck R., Deniz Yavuz M., Yeung B. Banking System Control, Capital Allocation, and Economy Performance[J]. Journal of Financial Economics, 2011,100(2):264-283
[34] Demirgüç-Kunt A., Kane E. J., Laeven L. Deposit Insurance Database[R]. Policy Research Working Papers, 2014
[35] Demirgüç-Kunt A., Detragiache E. Does Deposit Insurance Increase Banking System Stability?An Empirical Investigation[J]. Journal of Monetary Economics, 2002,49(7):1373-1406
[36] Barth J. R., Jr G. C., Levine R. Bank Regulation and Supervision in 180 Countries from 1999 to 2011[J]. Journal of Financial Economic Policy, 2013,5(2):111-219
[37] World Bank. Deposit Insurance-Reforms Supported by the World Bank during the Period 1993-2004 Mimeo[R]. Operations Evaluation Department of World Bank, 2004
[38] European Commission. Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on Deposit-Guarantee Schemes[R]. European Commission, 1994
[39] Angkinand A., Wihlborg C. Deposit Insurance Coverage, Ownership, and Banks'Risk-taking in Emerging Markets[J]. Journal of International Money and Finance, 2010,29(2):252-274
[40] Kiefer N. M. Economic Duration Data and Hazard Functions[J]. Journal of Economic Literature, 1988,26(2):646-679
[41] Kroszner R. S., Strahan P. E. What Drives Deregulation?Economics and Politics of the Relaxation of Bank Branching Restrictions[J]. The Quarterly Journal of Economics, 1999,114(4):1437-1467
[42] Røpke I. Sustainability and the Governance of the Financial System:What Role for Full Reserve Banking?[J]. Environmental Policy and Governance, 2017,3(20):1-16
[43] 王道平.利率市场化、存款保险制度与系统性银行危机防范[J].金融研究, 2016,427(1):50-65
[44] Hovakimian A., Kane E. J., Laeven L. How Country and Safety-Net Characteristics Affect Bank Risk-Shifting[J]. Journal of Financial Services Research, 2003,23(3):177-204