Regulatory changes to bank liability structures: implications for deposit insurance design

Download
Author
Davis, KDate
2020-03-01Source Title
Journal of Banking RegulationPublisher
Palgrave Macmillan (part of Springer Nature)University of Melbourne Author/s
Davis, KevinAffiliation
FinanceMetadata
Show full item recordDocument Type
Journal ArticleCitations
Davis, K. (2020). Regulatory changes to bank liability structures: implications for deposit insurance design. Journal of Banking Regulation, 21 (1), pp.95-106. https://doi.org/10.1057/s41261-019-00094-0.Access Status
Open AccessAbstract
“Tiered” depositor (or deposit insurer) preference as exists in Australia and has been recently introduced in the EU and UK calls into question the merits of ex ante fees for explicit, limited deposit insurance under such arrangements. This paper illustrates how, under such arrangements, the “fair price” of deposit insurance and risks to the deposit insurer are reduced to near zero unless virtually all bank non-equity funding is insured deposits. It is also argued that other regulatory changes affecting bank liability structures and resolution arrangements reinforce that effect, while introduction of “resolution funds” calls into question the rationale for a separate deposit insurance fund. While increased use of collateralised financing complicates resolution arrangements and raises other risks for financial stability, its impact on a “fair price” for deposit insurance under tiered preference is minimal.
Export Reference in RIS Format
Endnote
- Click on "Export Reference in RIS Format" and choose "open with... Endnote".
Refworks
- Click on "Export Reference in RIS Format". Login to Refworks, go to References => Import References
Collections
- Minerva Elements Records [53102]
- Finance - Research Publications [132]