預金保険制度の目的と付保預金限度額  [in Japanese] Purpose of Deposit Insurance and Amount of Insurance Coverage  [in Japanese]

This paper discusses the amount of coverage offered by the deposit insurance systems. Deposit insurance inherently incurrs moral hazard. It means that, despite depositors have competence to monitor the deposit taking banks, high insurance coverage decrease the incentive to do so. Most countries implement deposit insurance systems for two reasons; (1) enhancing public confidence and systemic stability by two types of insurance systems, (2) providing consumer protection for small depositors who can not monitor the bank because of the lack of ability and appropriate information to do so. The former type of protection would have wider and higher coverage than the latter one. We used economic data to conduct statistical analysis about the coverage of deposit insurance. We suggest that the co-insurance should be introduced in the deposit insurance system for minimizing the moral hazard.