آیا بیمه سپرده باعث افزایش پایداری سیستم بانکداری می شود؟ تحقیقات تجربی

Based on evidence for 61 countries in 1980–1997, this study finds that explicit deposit insurance tends to increase the likelihood of banking crises, the more so where bank interest rates are deregulated and the institutional environment is weak. Also, the adverse impact of deposit insurance on bank stability tends to be stronger the more extensive is the coverage offered to depositors, where the scheme is funded, and where it is run by the government rather than the private sector.

The oldest system of national bank deposit insurance is the U.S. system, which was established in 1934 to prevent the extensive bank runs that contributed to the Great Depression. It was not until the Post-War period, however, that deposit insurance began to spread around the world (Table 1). The 1980s saw an acceleration in the diffusion of deposit insurance with most OECD countries and an increasing number of developing countries adopting some form of explicit depositor protection. In 1994, deposit insurance became the standard for the newly created single banking market of the European Union.1 More recently, the IMF has endorsed a limited form of deposit insurance in its code of best practices (Folkerts-Landau and Lindgren, 1998). Table 1. Deposit insurance system features Countries Banking crisis date Type explicit=1 implicit=0 Date established Coinsurance Coverage limit Foreign currency deposits covered Interbank deposits covered Funding Funded=1 Unfunded=0 Source of funding Banks only=0 Banks and Gov.=1 Government only=2 Bank's premium of deposits or liabilities Management official=1 joint=2 private=3 Membership compulsory=1 voluntary=0 Australia 0 Austria 1 1979 0 $24,075 but 0 0 0 1 Callable 3 1 coinsurance for businesses Bahrain 1 1993 0 1 0 0 0 Callable 2 1 Belgium 1 1974 0 ECU 15,000, 20,000 0 0 1 1 0.0002 of deposits 2 1 in year 2000 from clients Belize 0 Burundi 0 Canada 1 1967 0 $40,770 0 1 1 1 0.0033 of insured 1 1 deposits (max) Chile 1981–1987 1 1986 1 Demand deposits in 1 0 0 2 Callable 1 1 full and 90% coinsurance to UF 120 or $3600 for saving deposits Colombia 1982–1985 1 1985 1 Full until 2001, then 0 1 1 0 0.003 insured deposits 1 1 coins. 75% to $5500 Congo 1 1999 0 $3557 0 1 1 1 0.0015 of deposits 2 0 + 0.005 of npls Cyprus 0 Denmark 1 1988 0 ECU 20,000 1 0 1 1 0.002 of total deposits 2 1 Ecuador 1995–1997 1 1999 0 In full to year 2001 1 1 1 N/A. 0.0065 of deposits 1 1 Egypt 0 El Salvador 1989 1 1999 0 $4,720 1 0 1 1 0.001 to 0.003 of 1 1 insured deposits Finland 1991–1994 1 1969 0 $29,435 1 0 1 1 0.0005 to 0.0030 of 3 1 insured deposits France 1 1980 0 $65,387 0 0 0 0 Callable 3 1 Germany 1 1966 1 Private: 30% of 1 0 1 0 0.0003 of deposits 3 1 capital; official coinsurance 90% to ECU 20,000 Greece 1 1993 0 ECU 20,000 0 0 1 0 0.00025–0.0125 of 2 1 eligible deposits Guatemala 0 Guyana 1993–1995 0 Honduras 0 India 1991–1997 1 1961 0 $2,355 1 0 1 1 0.0005 of deposits 1 1 Indonesia 1992–1997 0 Ireland 1 1989 1 Co insurance 90% 0 0 1 0 0.002 of deposits 1 1 to ECU 15,000 Israel 1983–1984 0 Italy 1990–1995 1 1987 1 $125,000 1 0 0 1 Callable 3 1 Jamaica 1996–1997 1 1998 0 $5,512 1 0 1 1 0.001 of insured deposits 1 1 Japan 1992–1997 1 1971 0 $71000 but in full 0 0 1 1 0.00084 of insured deposits 2 1 until year 2000 Jordan 1989–1990 0 Kenya 1993 1 1985 0 $1,750 1 1 1 1 0.0015 of deposits 1 1 Korea 1997 1 1996 0 $14600 but in full until year 2000 0 0 1 1 0.0005 of insured deposits 1 1 Malaysia 1985–1988,1997 0 Mali 1987–1989 0 Mexico 1982, 1994–1997 1 1986 0 In full, except 1 1 1 1 0.003 of covered liab. 1 1 subordinated debt, until 2005 Nepal 1988–1997 0 Netherlands 1 1979 0 ECU 20,000 1 0 0 1 1 1 New Zealand 0 Nigeria 1991–1995 1 1988 0 $588/$2435∗ 0 1 1 1 0.009375 of deposits 1 1 Norway 1987–1993 1 1961 0 $260,800 1 0 1 1 0.0001 of deposits 1 1 Panama 1988–1989 0 Papua New Guinea 1989–1997 0 Peru 1983–1990 1 1992 0 $21,160 0 0 1 1 0.0065 to 0.0145 of 2 1 1 insured deposits Philippines 1981–1987 1 1963 0 $2,375 1 1 1 1 0.002 of total deposits 1 1 Portugal 1986–1989 1 1992 0 ECU 15,000, 1 0 1 1 0.0008 to 0.0012 1 1 coinsurance to ECU 45,000 Seychelles 0 Singapore 0 South Africa 1985 0 Sri Lanka 1989–1993 1 1987 0 $1,470 1 0 1 1 0.0015 of deposits 1 0 Sweden 1990–1993 1 1996 0 ECU 28663, $31,412 1 0 1 1 0.005 1 1 Swaziland 1995 0 Switzerland 1 1984 0 $19,700 0 0 0 0 Callable 1 0 Tanzania 1988–1997 1 1993 0 $376 0 0 1 1 0.001of deposits 3 1 Thailand 1983–1987, 1997 0 Togo 0 Turkey 1982, 1991, 1994 1 1983 0 In full 1 0 1 1 0.01 to 0.012 1 1 U.K. 1 1982 1 Larger of 90% 0 0 0 0 Callable 3 1 coinsurance to $33,333 or ECU 22,222 U.S. 1980–1992 1 1934 0 $100,000 1 1 1 1 0.00 to 0.0027 1 1 Uruguay 1981–1985 0 Venezuela 1993–1997 1 1985 0 $7,309 0 0 1 1 0.02 of total deposits 1 1 Zambia 0 Implicit is defined as lack of an explicit scheme. Date established refers to the date of the statute by which the scheme is established. Coinsurance is a dummy variable that takes on the value one if depositors face a deductible in their insured funds. Coverage limit refers to the explicit amount the authorities promise to insure. Foreign currency deposits and interbank deposits take value one if insurance coverage extends to those areas, respectively. Funding takes the value one if the scheme is funded ex ante and zero otherwise. Source of funding can be from government only (2), banks and government (1), or banks only (0). The premium banks pay is given as percentage of deposits or liabilities. Management of the fund can be official (1), official/private joint (2), or private (3). Membership to the fund can be compulsory or voluntary. Sources: Kyei (1995); Garcia (1999); Institute of International Bankers—Global Surveys (1998, 1997, 1996, 1995, 1994). “Korea introduces bank deposit insurance scheme”, International Financial Law Review; London; April 1997; Dong Won Ko. “Law on deposit insurance fund”, Central Bank of Turkey—Unofficial Translation. “Banking failures in developing countries: an auditors perspective”, International Journal of Government Auditing: Washington, January 1998; Javed Nizam. “Belgium implements deposit guarantee-scheme”, International Financial Law Review, London, June 1995; Bruyneel, Andre, Miller, Axel. “Venezuela: Ministry representative views banking system”, FEDWORLD, 08/05/96 at http://wnc.fedworld.gov/cgi-bin/retrieve. Bank of Finland Bulletin, March 1998, Vol. 72, No: 3. “Japan: stimulation package”, Oxford Analytica Brief, December 1997. “EC deposit-guarantee directive”, International Financial Law Review; London; December 1995, Fredborg, Lars. Table options Despite its increased favor among policymakers, the desirability of deposit insurance remains a matter of some controversy among economists. In the classic work of Diamond and Dybvig (1983), deposit insurance (financed through money creation) is an optimal policy in a model where bank stability is threatened by self-fulfilling depositor runs. If runs result from imperfect information on the part of some depositors, suspensions can prevent runs, but at the cost of leaving some depositors in need of liquidity in some states of the world (Chari and Jagannathan, 1988). As pointed out by Bhattacharya et al. (1998), in this class of models deposit insurance (financed through taxation) is better than suspensions provided the distortionary effects of taxation are small. In Allen and Gale (1998) runs result from a deterioration in bank asset quality, and the optimal policy is for the Central Bank to extend liquidity support to the banking sector through a loan.2 Whether or not deposit insurance is the best policy to prevent depositor runs, all authors acknowledge that it is a source of moral hazard: as their ability to attract deposits no longer reflects the risk of their asset portfolio, banks are encouraged to finance high-risk, high-return projects. As a result, deposit insurance may lead to more bank failures and, if banks take on risks that are correlated, systemic banking crises may become more frequent.3 The U.S. Savings & Loan crisis of the 1980s has been widely attributed to the moral hazard created by a combination of generous deposit insurance, financial liberalization, and regulatory failure (see, for instance, Kane, 1989). Thus, according to economic theory, while deposit insurance may increase bank stability by reducing self-fulfilling or information-driven depositor runs, it may decrease bank stability by encouraging risk taking on the part of banks. When the theory has ambiguous implications it is particularly interesting to look at the empirical evidence, yet no comprehensive empirical study to date has investigated the effects of deposit insurance on bank stability. This paper is an attempt to fill this gap. To this end, we rely on a newly constructed data base assembled at the World Bank which records the characteristics of deposit insurance systems around the world. A quick look at the data reveals that there is considerable cross-country variation in the presence and design features of depositor protection schemes (Table 1): some countries have no explicit deposit insurance at all (although depositors may be rescued on an ad hoc basis after a crisis occurs, of course), while others have generous systems with extensive coverage and no coinsurance. Other countries yet have schemes that place strict limits on the size and nature of covered deposits, and require co-payments by the banks. The deposit insurance funds may be managed by the government or the private sector, and different financing arrangements are also observed. Since a number of countries have adopted deposit insurance in the last two decades, the data exhibit some time-series variation as well. Finally, the 61 countries in the sample experienced 40 systemic banking crises over the period 1980–1997. Given the considerable variation in deposit insurance arrangements and the relatively large number of banking crises, it is possible to use this panel to test whether the nature of the deposit insurance system has a significant impact on the probability of a banking crisis once other factors are controlled for. We carry out these tests using the multivariate logit econometric model developed in our previous work on the determinants of banking crises (Demirgüç-Kunt and Detragiache, 1998). The first test that we perform is whether a zero-one dummy variable for the presence of explicit deposit insurance has a significant coefficient. This approach constrains all types of deposit insurance schemes to have the same impact on the banking crisis probability. In practice, such impact may well be different depending on the specific design features of the system: for instance, more limited coverage should give rise to less moral hazard, although it may not be as effective at preventing runs. Similarly, in a system that is funded the guarantee may be more credible than in an unfunded system; thus, moral hazard may be stronger and the risk of runs smaller when the system is funded. To take these differences into account, we construct alternative deposit insurance variables using the design feature data. We then estimate a number of alternative banking crisis regressions in which the simple zero-one deposit insurance dummy is replaced by each of the more refined variables. A second aspect addressed by this study is whether the effect of deposit insurance on bank stability depends on the quality of the regulatory and legal environment. This is a natural question to ask, since one of the tasks of bank regulation is to curb the adverse incentives created by deposit insurance, and a good legal system and an efficient judiciary can reduce default risk and curb fraud. Using various indexes of the quality of institutions and of the legal environment, we test whether in countries with better institutions deposit insurance has a smaller adverse impact on bank stability. In the third part of the paper we address some robustness issues, including the important concern that results may be affected by simultaneity bias if the decision to adopt deposit insurance is affected by the fragility of the banking system. To assess the extent of this problem, a two-stage estimation exercise is carried out, in which the first-stage estimation is a logit model of the adoption of explicit deposit insurance, while the banking crisis probability regression is estimated in the second-stage. We also perform some sensitivity analysis, and explore further the role of banking system characteristics in shaping the relationship between deposit insurance and stability. The paper is organized as follows: Section 2 contains an overview of the data and of the methodology. The main results are in Section 3. Section 4 addresses the role of institutions. Section 5 contains the sensitivity analysis, Section 6 explores the role of banking system characteristics for which we lack time-series data, and Section 7 concludes.

Explicit deposit insurance has become increasingly popular, and a growing number of depositors around the world are now sheltered from the risk of bank failure. However, the question of the effects of such schemes on banking sector stability remains an open one both from a theoretical and from an empirical perspective. Having analyzed empirical evidence for a large panel of countries for 1980–1997, this study finds that explicit deposit insurance tends to be detrimental to bank stability, the more so where bank interest rates have been deregulated and where the institutional environment is weak. We interpret the latter result to mean that, where institutions are good, opportunities for moral hazard are more limited, and more effective prudential regulation and supervision better offset the adverse incentives created by deposit insurance. Also, the impact of deposit insurance on bank stability tends to be stronger the more extensive is the coverage offered to depositors, where the scheme is funded, and where the scheme is run by the government rather than by the private sector. Controlling for the possible endogeneity of deposit insurance does not change these results significantly. These findings raise a number of interesting questions: first, what is the channel that leads from explicit deposit insurance to increased bank fragility, given that depositors tend to be bailed out anyway when systemic problems arise? Here we offer two possible interpretations. The first is that without an explicit legal commitment by the government there remains a degree of uncertainty on the part of depositors as to what extent and how quickly their losses will be covered in case of a crisis.29 This margin of uncertainty, then, is sufficient to restore significant incentives for depositors to monitor bank behavior. A possible objection to this interpretation (and, more generally, to the view that deposit insurance is an important source of moral hazard) is that it is very costly (and perhaps impossible) for depositors, especially small ones, to be effective monitors of banks. Acquiring and evaluating information about the quality of bank assets is a complex and costly activity which is likely to be subject to a substantial collective action problem, as each individual depositor can free-ride on the monitoring activities of the others (Stiglitz, 1992).30 There is, however, an alternative explanation of why deposit insurance may increase bank fragility, that does not rely on the ability of depositors to monitor banks: with deposits already covered by the funds set aside through the insurance fund, in the event of a crisis other bank creditors and perhaps even bank shareholders may be in a better position to pressure policymakers to extend protection to their own claims. Conversely, if it must scramble to find the budgetary resources to pay off depositors, then the government may find it easier to say no to the other claimants. If this is true, then ex ante deposit insurance would lead to weaker incentives to monitor bank management not only for depositors, but also for other bank creditors and bank shareholders.31 Interestingly, Demirgüç-Kunt and Huizinga (1999) find the cost of funds for banks to be lower and less sensitive to bank-specific risk factors in countries with explicit deposit insurance. This supports the view that deposit insurance weakens market discipline, be it discipline exercised by depositors, by other bank creditors, or by bank shareholders. A second interesting issue is whether there are reasons to adopt explicit deposit insurance despite its negative impact on systemic stability. It is sometimes argued that the main purpose of deposit insurance is to provide a risk-free asset to small savers (Folkerts-Landau and Lindgren, 1998). Critics of this view, however, point out that this function can be performed at a lower cost to the economy by assets other than insured bank deposits, such as postal savings or money market funds backed by government debt (Calomiris, 1996; Stiglitz, 1992), or that banks issuing insured deposits could be constrained to remain “narrow” banks. Another, related argument for introducing deposit insurance is that it may create the basis for a more developed banking system that performs more financial intermediation. This is a conjecture that awaits thorough empirical examination, although preliminary results are not encouraging (Cull, 1998). A third question, of obvious importance in giving policy advice, is whether deposit insurance may be beneficial to stability in some types of countries even though, on average, it has an adverse effect. Our empirical results suggest that in countries with a very good institutional environment deposit insurance may not lead to additional instability, perhaps because in those countries regulators can more effectively offset moral hazard.