Government deposit insurance and the Diamond-Dybvig model

NCUIR > School of Management at National Central University > Graduate Institute of Finance > journal & Dissertation > Item 987654321/29547

Please use this identifier to cite or link to this item: http://ir.lib.ncu.edu.tw/handle/987654321/29547

Title:	Government deposit insurance and the Diamond-Dybvig model
Authors:	McCulloch,JH;Yu,MT
Contributors:	財務金融所
Keywords:	BANK RUNS;LIQUIDITY
Date:	1998
Issue Date:	2010-06-29 20:30:39 (UTC+8)
Publisher:	中央大學
Abstract:	The apparent banking market failure modeled by Diamond and Dybvig [1983] rests on their inconsistently applying their "sequential servicing constraint" to private banks but not to their government deposit insurance agency. Without this inconsistency, banks can provide optimal risk-sharing without tax-based deposit insurance, even when the number of "type 1" agents is stochastic, by employing a "contingent bonus contract." The threat of disintermediation noted by Jacklin [1987] in the nonstochastic case is still present but can be blocked by contractual trading restrictions. This article complements Wallace [1988], who considers an alternative resolution of this inconsistency.
Relation:	GENEVA PAPERS ON RISK AND INSURANCE THEORY
Appears in Collections:	[Graduate Institute of Finance] journal & Dissertation

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