Fair pricing of deposit insurance. Is it possible? Yes. Is it desirable? No

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• dc.contributor.author Freixas, Xavierca
• dc.contributor.author Rochet, Jean Charlesca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T10:50:30Z
• dc.date.available 2017-07-26T10:50:30Z
• dc.date.issued 1995-01-01
• dc.date.modified 2017-07-23T02:02:03Z
• dc.description.abstract This note elaborates on a recent article by Chan, Greenbaum and Thakor (1992) who contend that fairly priced deposit insurance is incompatible with free competition in the banking sector, in the presence of adverse selection. We show here that at soon as one introduces a real economic motivation from private banks to manage the deposits from the public, then fairly priced deposit insurance becomes possible. However, we also show that such a fairly priced insurance is never desirable, precisely because of adverse selection. We compute the characteristics of the optimal premium schedule, which trades off between the cost of adverse selection and the cost of ``unfair competition ''.
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=130
• dc.identifier.citation Research in Economics, 52, 3, (1998), pp. 217-232
• dc.identifier.uri http://hdl.handle.net/10230/20749
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 130
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword Finance and Accounting
• dc.title Fair pricing of deposit insurance. Is it possible? Yes. Is it desirable? Noca
• dc.type info:eu-repo/semantics/workingPaper