This dissertation examines two issues in the theory of banking: the role and efficiency of a monopoly bank in a spatial economy and, the design of a deposit insurance contract. Chapters 2 and 3 of the thesis present the development and analysis of a simple production economy with two types of agents. Lenders have an endowment of one unit of a good that may be consumed or invested in a firm. Firms have access to a project but lack the capital necessary to operate it and thus are forced to borrow: firms' projects are identically independently distributed crosssectionally. A simple information asymmetry prevents efficient contracting by lenders and firms and results in deadweight default costs being incurred. One way these deadweight costs could be avoided is to establish a "delegated monitor"—a bank—who collects deposits from the lenders and makes loans to firms. This may result in an efficiency gain since the firms' projects are Ltd. so, as the bank makes more loans, the probability that it defaults will be lower than the probability that an individual firm defaults. This diversification reduces the probability that the bank will fail and the probability that default costs are incurred. However, I assume that these costs are related to distance. This restricts the bank's ability to diversify and may induce costly strategic behavior on the part of the bank. The bank may also lend 'locally' in that it may attract deposits in a region yet not make loans to firms near those depositors. The social welfare implications of this bank are examined in Chapter 3. The results show that the socially optimal outcome is one that restricts the firms' ability to compete with the bank in the debt market and that credit rationing may also be efficient. Chapter 4 examines a model where a deposit insurance scheme is designed by a regulator whose objective is to maximize social welfare. There is a single bank in the economy which can be one of two types: the true type is unknown to the regulator. The results show that the regulator's efficacy is improved when regular insurance premia are combined with a premia that are refunded to solvent banks—akin to a deposit insurance fund.

Thesis (Ph. D.)--Georgia State University, 2006. / Title from title screen. James Owers, Stephen D. Smith, committee co-chairs. Electronic text (85 p.) : digital, PDF file. Description based on contents viewed May 7, 2007. Includes bibliographical references (56-58).

This dissertation examines two issues in the theory of banking: the role and efficiency of a monopoly bank in a spatial economy and, the design of a deposit insurance contract. Chapters 2 and 3 of the thesis present the development and analysis of a simple production economy with two types of agents. Lenders have an endowment of one unit of a good that may be consumed or invested in a firm. Firms have access to a project but lack the capital necessary to operate it and thus are forced to borrow: firms' projects are identically independently distributed crosssectionally. A simple information asymmetry prevents efficient contracting by lenders and firms and results in deadweight default costs being incurred. One way these deadweight costs could be avoided is to establish a "delegated monitor"—a bank—who collects deposits from the lenders and makes loans to firms. This may result in an efficiency gain since the firms' projects are Ltd. so, as the bank makes more loans, the probability that it defaults will be lower than the probability that an individual firm defaults. This diversification reduces the probability that the bank will fail and the probability that default costs are incurred. However, I assume that these costs are related to distance. This restricts the bank's ability to diversify and may induce costly strategic behavior on the part of the bank. The bank may also lend 'locally' in that it may attract deposits in a region yet not make loans to firms near those depositors. The social welfare implications of this bank are examined in Chapter 3. The results show that the socially optimal outcome is one that restricts the firms' ability to compete with the bank in the debt market and that credit rationing may also be efficient. Chapter 4 examines a model where a deposit insurance scheme is designed by a regulator whose objective is to maximize social welfare. There is a single bank in the economy which can be one of two types: the true type is unknown to the regulator. The results show that the regulator's efficacy is improved when regular insurance premia are combined with a premia that are refunded to solvent banks—akin to a deposit insurance fund. / Business, Sauder School of / Graduate

Thesis (Ph. D.)--University of Washington, 1999. / Vita. Includes bibliographical references (leaves 128-133).

This paper empirically estimates the impact of the deposit insurance coverage changes on deposit levels and growth. The analysis is based on a Canadian dataset from a variety of sources. It covers quarterly data on deposits by province and by type of banking institution over the period of 1997-2011. During this period there were eight deposit insurance coverage changes. I employ a triple difference in difference estimation strategy to take advantage of changes in coverage levels between and within provinces. I find that in a year following a provincial regulator increases the deposit insurance coverage level to unlimited, credit unions in that province experience higher deposit levels than chartered banks in that province, and credit unions in provinces with lower deposit insurance coverage limits. I also find that during the 2008 financial crisis, credit unions in provinces with unlimited coverage had higher deposit levels. / Graduate

This paper presents a methodology for evaluating the solvency of banks and for empirically estimating the prices of government guarantees on loans made by banks and deposit insurance premiums, from the failure history of Hong Kong. The approach used exploits the isomorphic correspondence between loan guarantees and common stock put options. Though limited by the data set of publicly available information, this study is successful in identifying problem banks, and more specifically in evaluating the solvency of banks. Therefore, the model is useful in the early-warning aspect. Moreover, if the information set can be expanded to include those information available to the regulator, the result of this study can be improved. / Business, Sauder School of / Graduate

This thesis empirically investigates the bank runs probability cases over the period 2005-2011 on Russian banking market and, simultaneously, tests the hypothesis of influence of bank-fundamental factors and macroeconomic conditions on the decision of depositors to withdraw their funds from banks. Methodologically, was conducted a logit econometric model to test our assumptions. We find evidence on both bank- fundamentals, such as high debt ratio, rising real interest rates, small asset size, and macroeconomic conditions, such as high inflation, and sharp increases in the real exchange rates, to influence on bank runs. In addition, the thesis analyzes the significance of deposit insurance implementation in avoiding bank runs. Moreover, we compare if the newly adopted deposit insurance diminished the credibility of the depositors in the state-controlled banks compared with private banks, thus, increasing the amount of investments to private banks. Finally, based on our approach, the method identifies a run on Russian deposit market during quarter four of 2008 year; however we would not characterize it as a severe run because it did not touch all banks but more as a partial one (approx. 1/3 of banks from the system were affected).

This dissertation studies empirical corporate finance problems of regulations and monitoring. The dissertation is composed of three chapters. First, I study how firms deal with business regulations that limit their operations. In the first chapter I exploit a natural experiment in Argentina to show that the ownership structure of a firm affects its degree of compliance with regulations, with publicly listed firms complying more than privately held ones. In 2012 the Argentine government banned companies from transferring funds abroad from their domestic operations. Despite this limitation, companies trying to repatriate capital could still overprice products they import from their headquarters or affiliates. I find that after the regulation, private firms overprice imports by almost 10% and manage to repatriate up to 46% of the profits that would have otherwise remained locked in at the Argentine subsidiary. Listed companies do not exploit this mechanism, showing that listing status affects compliance. The second chapter studies whether the differential cost imposed on listed firms operating in emerging markets by these higher compliance rates is significant. The main empirical challenge is that the cost is firm-time-regulation specific, and, for that reason, it is empirically unfeasible to measure it. I take an alternative route and show that changes in the levels of market regulations impose compliance costs of such magnitude that they shape the patterns of M&A transactions. First, I show that after the regulation studied in Chapter 1, private firms acquired listed ones at an extraordinary pace, while listed firms stopped acquiring private ones. This evidence suggests that the regulation increased the cost of being public. Then, I show that this finding is not specific to the Argentine market but is common across emerging markets. I do so by analyzing the response of M&A transactions to changes in the regulatory intensity of each country. Finally, the third chapter, co-authored with Matthieu Chavaz, studies the effect of deposit insurance on market discipline in a close-to-ideal setting. We exploit the political relationship between the United Kingdom and its Crown Dependencies and use a novel dataset to test this effect. Tracking the price paid for thousands of deposit products between 2007 and 2015, we find that deposit insurance deters discipline. In addition, we provide the first direct test of the interaction between depositors’ attention, deposit insurance, and market discipline. We show that when attention increases, risky banks offer higher rates both to insured and uninsured depositors, but that the effect is stronger for uninsured depositors. These results suggest that discipline is imposed even in the presence of deposit insurance, but only when information becomes salient.

Reserve Required System, a monetary policy manipulated by Taiwanese Government has been gradually reduced or even abandoned in global financial market, which eliminates the international competiveness of domestic banking industry. However, the government has no intention in implementing Zero Reserve Requirement. Given current domestic monetary policies as well as system of banking supervision, I propose "Risk-Based Deposit Reserves" for financial authorities implement. Current international usage sets an absolute value of reserve ratio, not in accordance with its operating risk. Therefore I designed a ¡§Five-Level Differential Deposit Reserve System¡¨ based on Capital Adequacy Ratio and Composite Risk Rating Score of the bank. Such innovation will help increase the quality of banks and eliminate unhealthy banks which will strengthen domestic banking industry in challenges of Basel ¢» and its competitiveness.

ABSTRACT Deposit Insurance: Is it good for the development of Financial Markets? BY Kaysia Therese Campbell April 25, 2006 Committee Chair: Dr. Stephen Smith and Dr. James Owers Major Department: Finance The literature on deposit insurance has focused primarily on the role it plays in promoting banking sector stability and growth, while little attention has been placed on its possible effect on the development of other markets. Failure to examine the impact of deposit insurance on other markets could lead to premature conclusions about the full effect it has on total financial market development and, in turn, economic growth. Using panel data and cross sectional averages on 96 countries covering the time period 1975 – 2004 to distinguish between short run and long run effects, and including a host of controls, I find evidence that deposit insurance is associated with greater long run, total financial market development, as measured by the size and activity of banks, equity markets, bond markets and non-bank financial intermediaries. This indicates that it is able to accelerate banking sector development without necessarily retarding the development of other markets so that overall financial market development is improved. It is important to note that this is primarily evident for countries with a strong legal and contracting environment. The results also suggest that the immediate impact of deposit insurance is greatest for middle income economies but over time there is no clear evidence that this persists. Using design features thought to contribute to the generosity and ability of the scheme to curb moral hazard and provide a credible guarantee, I construct two indices to summarize the various design features and examine their impact on financial market development. I find that countries adopting more credible schemes appear to have smaller and less active markets over time. However the results also indicate that more credible and generous design features are better able to promote total market activity in the long run. The hopeful conclusion to be made from this study is that the positive influence of deposit insurance on the banking sector is translated into the entire financial market system over time and may be irrespective of a country’s particular stage of economic development.