Financial opening, deposit insurance, and risk in a model of banking competition |
| |
Authors: | Tito Cordella Eduardo Levy Yeyati |
| |
Institution: | a Research Department, International Monetary Fund, 700 19th street N.W., Washington, DC 20431, USA b School of Business, Universidad Torcuato di Tella, Miñones 2159,1428 Buenos Aires, Argentina |
| |
Abstract: | We study the impact of competition on banks’ risk-taking behavior under different assumptions about deposit insurance and the dissemination of information. While financial opening increases banks’ riskiness, a risk-based deposit insurance or, alternatively, the public disclosure of financial information, are likely to mitigate this effect. Moreover, the limiting cases of uninsured but fully informed depositors, and risk-based full deposit insurance, yield the same equilibrium risk level. Although the welfare consequences of increased competition depend on its impact on risk, financial opening unambiguously improves welfare as we approach the limiting cases. |
| |
Keywords: | D82 G14 G21 G28 |
本文献已被 ScienceDirect 等数据库收录! |
|