Bank Insolvency, Deposit Insurance and capital Adequacy
Marini, François (2003), Bank Insolvency, Deposit Insurance and capital Adequacy, Journal of Financial Services Research, 24, p. 67–78. 10.1023/A:1025916701866
TypeArticle accepté pour publication ou publié
Journal nameJournal of Financial Services Research
MetadataShow full item record
Laboratoire d'Economie de Dauphine [LEDa]
Abstract (EN)This paper extends the Dowd (2000) model by introducing a risky investment technology. This assumption allows to introduce the possibility of an insolvency crisis. A banker may earn a positive expected profit by insuring depositors against the technological risk. If the bank has adequate capital, the insurance is credible and an insolvency crisis cannot occur. A public safety net may be unnecessary to prevent insolvency crises.
Subjects / KeywordsBank; Capital; Insurance company
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