Deposit Insurance, Banks’ Moral Hazard, and Regulation: : Evidence from the ASEAN Countries and Korea

• Autores: Iljoong Kim, Inbae Kim, Yoonseon Han
• Localización: Emerging Markets Finance & Trade, ISSN-e 1558-0938, Vol. 50, Nº. 6, 2014, págs. 56-71
• Idioma: inglés
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• Resumen

  • In this paper, we analyze the effect of deposit insurance (DI) on banks’ risk-taking for the ASEAN (Association of Southeast Asian Nations) countries and Korea. Previous studies focus primarily on developed countries or use mixed samples. The utilization of a panel data set consisting of 406 banks across our sample countries reveals that banks engage more actively in risk-taking in the presence of DI, that the adverse effect of DI is aggravated with extensive coverage, and that DI-related moral hazard is curbed through better regulatory quality. Particularly, risk-taking is relatively higher in Korea, but no difference is detected in the stabilizing effect of the regulatory quality. Relevant policy implications are offered