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Insuring for a Crisis: Deposit Insurance and the GFC, the Australian and New Zealand Experience *
Author(s) -
Jain Ameeta,
Keneley Monica,
Thomson Di
Publication year - 2012
Publication title -
economic papers: a journal of applied economics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 19
eISSN - 1759-3441
pISSN - 0812-0439
DOI - 10.1111/j.1759-3441.2012.00182.x
Subject(s) - deposit insurance , financial crisis , moral hazard , business , actuarial science , insurance policy , element (criminal law) , economics , financial system , political science , macroeconomics , market economy , law , incentive
Deposit insurance schemes were an important element in policy responses to the global financial crisis (GFC). There has been considerable debate about the nature and efficacy of such policy measures in alleviating the fallout from financial crises. The GFC highlighted problems associated with deposit insurance schemes including moral hazard, coverage limits, co‐insurance, cross border issues and market distortions. Despite these shortcomings, deposit insurance schemes were able to ameliorate the financial panic experienced and reduce contagion. This paper evaluates the Australian and New Zealand experience with deposit insurance introduced in response to the GFC, and compares this to the OECD experience. It reflects on the performance of deposit insurance schemes considered against the attributes of good policy design, and evaluates the specific problems and strengths encountered during the GFC.