Freixas, XavierRochet, Jean CharlesUniversitat Pompeu Fabra. Departament d'Economia i Empresa2017-07-262017-07-261995-01-01Research in Economics, 52, 3, (1998), pp. 217-232http://hdl.handle.net/10230/20749This 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 ''.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commonsinfo:eu-repo/semantics/workingPaperFinance and Accountinginfo:eu-repo/semantics/openAccess