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Journal of Systems Science and Complexity

, Volume 32, Issue 5, pp 1404–1425 | Cite as

The Payouts Choice for Deposit Insurance System

  • Yiming Chang
  • Shangmei ZhaoEmail author
  • Fei Hu
Article
  • 58 Downloads

Abstract

Entropy balancing is introduced to assess the deposit insurance design characteristics in this paper. Applying an extensive duration data including 141 countries from 1960 to 2015, the authors employ the entropy balancing method to simulate the data structure under the implicit deposit insurance system. Then the paper adopts an endogenous treatment effects model and a Heckman two-step selection model to examine payouts choice of the deposit insurance. It is found that entropy balancing can calibrate unit weights and reweight treatment and control groups by a maximum entropy scheme. Thus, a possibly given conditions will be satisfied and information concerning sample moments will be integrated. The results show clearly that different payouts choice and the corresponding coverage setting can effectively reduce the moral hazards that may result from the introduction of a deposit insurance scheme. When the Payouts is Per Depositor Account or Per Depositor, the banks’ moral hazard is higher. However, the payment method of Per Depositor Per Institution can effectively restrain the banks’ risk-taking activities.

Keywords

Deposit insurance entropy balancing payouts choice treatment effects 

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Copyright information

© The Editorial Office of JSSC & Springer-Verlag GmbH Germany 2019

Authors and Affiliations

  1. 1.School of Economics and ManagementBeihang UniversityBeijingChina
  2. 2.Institute of Market and Price, National Development and Reform CommissionBeijingChina

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