Skip to:
  1. Main navigation
  2. Main content
  3. Footer
Economic Commentary

Equity, Efficiency, and Mispriced Deposit Guarantees

Download pdf

Federal deposit insurance is supposed to protect savers and to help stabilize our banking system. However, if the deposit guarantees are mispriced, federal deposit insurance has unintended effects that are undesirable. In this Economic Commentary, we examine the factors that determine the value of deposit insurance. We show how insured banks can increase the value of their insurance and discuss their incentives to do so.

07.15.1986EC 7/15/1986

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.

Suggested Citation

Thomson, James B. 1986. “Equity, Efficiency, and Mispriced Deposit Guarantees.” Federal Reserve Bank of Cleveland, Economic Commentary 7/15/1986.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International