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A Comment Concerning Deposit Insurance and Moral Hazard / Gary Richardson.
- Format:
- Book
- Author/Creator:
- Richardson, Gary.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w12719.
- NBER working paper series no. w12719
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2006.
- Summary:
- Hooks and Robinson argue that moral hazard induced by deposit insurance induced banks to invest in riskier assets in Texas during the 1920s. Their regressions suggest this manifestation of moral hazard may explain a portion of the events that occurred during the 1920s, but some other phenomena, hitherto overlooked, must also be at work. Economic logic and evidence form the archives of the Board of Governors suggest that phenomenon is mismanagement and defalcation by corporate officers, which increases when insurance reduces depositors' incentives to monitor and react to the safety and soundness of banks.
- Notes:
- Print version record
- December 2006.
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