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Article: Deposit insurance and banking crises in the short and long run.
- Article from:
- The Cato Journal
- Article date:
- September 22, 2003
- Author:
CopyrightCOPYRIGHT 2003 Cato Institute. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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There has been a rising global trend for countries, especially in the emerging economies, to institute explicit deposit insurance schemes in the last two decades. During this period, financial markets in the world have been frequently plagued by instabilities and banking crises, notably the Mexican crisis in 1995 and the Asian financial crisis in 1997, not to mention the recent meltdown of Argentina. Among the ninny arguments in favor of deposit insurance, protection of small depositors and prevention of systemic banking crises are the ones most often put forward by regulators to rationalize deposit insurance from a public-interest perspective. (1) Nonetheless, the ...