The Effect of Deposit Insurance on Risk Taking in Asian Banks

Enkhbold, Enerelt; Otgonshar, Batnairamdal

doi:10.5296/ajfa.v5i1.3023

Cited by 9 publications

(9 citation statements)

References 31 publications

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“…Contrastingly, some studies explore whether the impact of deposit insurance on bank risk-taking incentives (Enkhbold & Otgonshar, 2013;Karas et al, 2019). Enkhbold & Otgonshar (2013) Other studies apply capital-risk weighted asset ratios to capture bank risk.…”

Section: Previous Literature On Market Discipline and Bank Risk-takingmentioning

confidence: 99%

Market Discipline and Bank Risk-Taking: The Interbank Deposit Perspective

Kato¹

2021

JFRM

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This paper investigates the relation between market discipline and bank risk-taking for Tanzanian commercial banks during the period 2009-2017. In the fixed effect (within) estimator, it uncovers mixed results. It found some support that market discipline exists and via interbank deposit reduced bank risk (i.e. credit risk). Contrary to expectation, the finding exhibits that the link between the interaction of market discipline and bank capital on bank risk is negative and statistically significant. It is also evident that bank capital, off-balance items, and size better explain the variation in bank risk. The results serve as a policy hint to banks' regulators and policymakers in strengthening market discipline framework for the reduction of bank risk-taking.

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Section: Previous Literature On Market Discipline and Bank Risk-takingmentioning

confidence: 99%

Market Discipline and Bank Risk-Taking: The Interbank Deposit Perspective

Kato¹

2021

JFRM

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“…Additionally, Enkhbold & Otgonshar (2013) in their research cutting across 31 Asian countries obtained and analysed data from a sample of 401 banks. Findings from the study revealed that banks exhibited increased market discipline arising from the implementation of DIS.…”

Section: H02mentioning

confidence: 99%

Deposit insurance fund and the quality of risk assets of Nigerian deposit money banks

Ebiaghan¹,

Jeroh²

2020

10.5267/j.msl

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This paper empirically assesses the relationship between Deposit Insurance Funds (DIF) and the quality of risk assets of listed Deposit Money Banks (DMBs) in Nigeria. The entire fifteen listed DMBs in the country as of 31st December, 2017 were focused on and the secondary data were subsequently sourced from the yearly financials of the Nigeria Deposit Insurance Corporation (NDIC) for a 29-year period covering from 1989 to 2017. The Auto-Regressive Distributed Lag (ARDL) and the Vector Error Correction (VEC) estimation techniques were the basis of estimating the relationship between the variables of interest in this study. Evidence from our analyses indicates that the volume of total deposits and total loans and advances of DMBs have long run negative and statistically significant relationship with DIF. Conversely, the quality of risk assets of DMBs exhibits a positive and insignificant relationship with the target reserve ratio of DMBs. The study thus recommends that regulatory agencies in the banking sector (CBN and NDIC), amongst others, collaborate with listed DMBs to diversify and manage their risk assets by strategically intensifying the implementation of existing measures aimed at minimising incidences of loan default and the alarming levels of non-performing loans in the portfolio of Nigerian DMBs.

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“…This study is therefore an attempt to bridge this gap by considering how deposit insurance schemes influence the deposit mobilization potential of deposit money banks in IADI's countries. Enkhbold and Otgonshar (2013) conducted a study on deposit insurance and risk-taking in Asian banks. The risk taken was peroxide by the cost of holding deposit reserves while deposit insurance was measured.…”

Section: Literature Reviewmentioning

confidence: 99%

Deposit Insurance Scheme Activities on Deposit Mobilization of International Association of Deposit Insurer Member Countries: Post Coreprinciple Effect

Offiong

Bessong

Arikpo

et al. 2020

IJFR

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This study examined deposit insurance schemes’ activities and its effect on deposit mobilization of the International Association of Deposit Insurers (IADI) member countries. The study dwelled on the banking sectors post-core principles of the member countries. The study assessed the effect of deposit insurance fund, deposit insurance cover, deposit insurance premium and deposit fully covered on the total deposit of the banking sectors of 21 member countries of IADI spanning the period 2014 to 2018. Data were sourced from the annual reports of the selected countries Deposit Insurance Agencies. The study adopted the ex-post facto research design. The estimating technique was panel Vector Error Correction Model (VECM). Findings from the analyses showed that deposit insurance scheme activities of member countries did not significantly affect IADI’s member countries banking sectors deposit mobilization after the implementation of the core principle. IADI, as a policy-making body must, therefore, review and localize its core principles and policies in line with member countries’ uniqueness and financial realities through investment in research in member countries to isolate unique factors peculiar to member countries and streamline policies to capture member countries’ financial and economic conditions. IADI should monitor the compliance level of member countries to ensure strict implementation of its policy and principles by member countries.

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The Effect of Deposit Insurance on Risk Taking in Asian Banks

Cited by 9 publications

References 31 publications

Market Discipline and Bank Risk-Taking: The Interbank Deposit Perspective

Market Discipline and Bank Risk-Taking: The Interbank Deposit Perspective

Deposit insurance fund and the quality of risk assets of Nigerian deposit money banks

Deposit Insurance Scheme Activities on Deposit Mobilization of International Association of Deposit Insurer Member Countries: Post Coreprinciple Effect

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