01892cas a2200253 a 4500 AALejournalIMF000663 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451851991 1018-5941 BD-DhAAL BD-DhAAL Cordella, Tito. Financial Opening, Deposit Insurance, and Risk in a Model of Banking Competition / Tito Cordella, Eduardo Levy Yeyati. Washington, D.C. : International Monetary Fund, 1998. 1 online resource (45 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper studies the impact of competition on the determination of interest rates and banks' risk-taking behavior under different assumptions about deposit insurance and the dissemination of financial information. It finds that lower entry costs foster competition in deposit rate sand reduce banks' incentives to limit risk exposure. Although higher insurance coverage amplifies this effect, two alternative arrangements (risk-based contributions to the insurance fund and public disclosure of financial information) help to reduce it. Moreover, uninsured but fully informed depositors and risk-based full deposit insurance yield the same equilibrium risk level, which is independent of entry costs. The welfare implications of the different arrangements are also explored. Mode of access: Internet Levy Yeyati, Eduardo. IMF Working Papers; Working Paper ; No. 1998/097 Full text available on IMF http://elibrary.imf.org/view/journals/001/1998/097/001.1998.issue-097-en.xml IMF e-Library