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Article: Moral hazard in a voluntary deposit insurance system: revisited.(Report)
- Article from:
- Review of Business Research
- Article date:
- November 1, 2008
- Author:
CopyrightCOPYRIGHT 2008 International Academy of Business and Economics. 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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ABSTRACT
This paper improves the methodology Wheelock and Kumbhakar (1995) use to test for moral hazard in the Kansas deposit insurance system over the period 1910-1920. This paper tests and finds evidence of omitted unobserved bank-specific effects. Estimates in Wheelock and Kumbhakar (1995), as a result, are biased. This paper introduces unobserved individual heterogeneity to the test for moral hazard, corrects their estimates, and finds stronger evidence of moral hazard in the Kansas deposit insurance system.
Keywords: Deposit Insurance, Moral Hazard Test, Panel Data, Random and Fixed Effects
1. INTRODUCTION.
Wheelock and Kumbhakar ...