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The implications of risk transmission for depositor protection

Wolfe, S. and McKenzie, G. (2009) The implications of risk transmission for depositor protection At 16th Annual Conference Multinational Finance Society. 01 Jun 2009.

Record type: Conference or Workshop Item (Paper)

Abstract

This paper investigates the nature of risks faced by banks and the ways in which bank regulators seek to protect depositors. We analyse how deposit insurance, the lender of last resort function and other safety net components combine for the protection of depositors. Using a conceptual framework based on modeling deposit insurance as a contingent claim we provide insights into how liquidity risk as well as solvency risk impact the cost of providing deposit insurance. In addition we assess where these risks are transferred if depositors are fully protected from them. Our core finding is that when depositor protection measures are not fairly priced banks have the incentive to take on excessive risks

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More information

Published date: 2009
Venue - Dates: 16th Annual Conference Multinational Finance Society, 2009-06-01 - 2009-06-01

Identifiers

Local EPrints ID: 71348
URI: http://eprints.soton.ac.uk/id/eprint/71348
PURE UUID: e0db3640-0d25-4aab-a44e-790273a34d57

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Date deposited: 03 Feb 2010
Last modified: 19 Jul 2017 00:00

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Contributors

Author: S. Wolfe
Author: G. McKenzie

University divisions

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