Abstract
The purpose of deposit insurance is to ensure financial stability, as well as protect the interests of small investors. But with government guarantees in hand, bankers take excessive risks, driving up the chances of failure. Evidence suggests that these schemes increase rather than decrease the probability of financial crises. There is a good chance that deposit insurance does more harm than good. This article surveys the rationale for and history of deposit insurance, and discusses its consequences and possible alternatives.
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Cecchetti, S.G. (2018). Deposit Insurance. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2176
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2176
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Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
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