A Study of Mutual Insurance for Bank Deposits

This article displays a study on the mutual insurance of bank deposits. A system where deposits are first insured by a consortium then by the Government is envisaged. We wish to compute the fair premia due to both the consortium and the Government. Various types of covenants aiming at making banks r...

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Bibliographic Details
Published in:The Geneva risk and insurance review 2005-12, Vol.30 (2), p.129-146
Main Authors: BERNARD, CAROLE, LE COURTOIS, OLIVIER, QUITTARD-PINON, FRANÇOIS
Format: Article
Language:English
Subjects:
Bank assets
Bank deposits
Bank liabilities
Bank management
Bankruptcy
Banks
Consortia
Covenants
Debt
Deposit insurance
Economics and Finance
Finance
Financial economics
Financial leverage
Financial models
Financial risk
Financial Services
G13
G21
Guarantees
Insurance
Insurance policies
Insurance premiums
Option pricing
Original Paper
Put & call options
Put options
Risk Management
Subsidies
Surveillance
Valuation
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Summary:This article displays a study on the mutual insurance of bank deposits. A system where deposits are first insured by a consortium then by the Government is envisaged. We wish to compute the fair premia due to both the consortium and the Government. Various types of covenants aiming at making banks reduce their risks are detailed. These provisions can be, as is the case in Chapter 11, of a Parisian type. This means that surveillance is based on the path followed by the assets or the leverage. We compare these various types of covenants and conclude on the proposal for new regulatory provisions.
ISSN:1554-964X
1554-9658
DOI:10.1007/s10713-005-4675-2