How do insured deposits affect bank risk? Evidence from the 2008 Emergency Economic Stabilization Act
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Datum
2014-10-01
Autor
Lambert, Claudia
Noth, Felix
Schüwer, Ulrich
SAFE No.
38
Metadata
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Zusammenfassung
This paper tests whether an increase in insured deposits causes banks to become more risky. We use variation introduced by the U.S. Emergency Economic Stabilization Act in October 2008, which increased the deposit insurance coverage from $100,000 to $250,000 per depositor and bank. For some banks, the amount of insured deposits increased significantly; for others, it was a minor change. Our analysis shows that the more affected banks increase their investments in risky commercial real estate loans and become more risky relative to unaffected banks following the change. This effect is most distinct for affected banks that are low capitalized.
Forschungsbereich
Financial Institutions
Schlagworte
financial crisis, deposit insurance, bank regulation
JEL-Klassifizierung
G21, G28
Thema
Systematic Risk
Fiscal Stability
Stability and Regulation
Fiscal Stability
Stability and Regulation
Beziehungen
1
Publikationstyp
Working Paper
Link zur Publikation
Collections
- LIF-SAFE Working Papers [334]