Private Insurance Against Banking Crises
Insurance contracts contingent on macroeconomic shocks or on average bank capital could be a way of insuring against systemic crises. With insurance, banks are recapitalized when negative events would otherwise cause a write-down of capital, or even bank insolvency. In particular, we are concerned with the following issues:
- Will banking crises be avoided by fair risk premia in loan provision or deposit insurance?
- Can banking crises be avoided by private insurance schemes?
- How can or should private insurance be organized?
- Which type of indicators of the financial health of the banking sector should be used in insurance contracts?
- How does financial intermediation contingent on macroeconomic events affect risk-allocation and the probability of banking crises?
- Can Crisis Contracts help to avoid banking crises?
- Preventing Banking Crises - with Private Insurance? CESifo Economic Studies, 2013, doi: 10.1093/cesifo/ifs043.
- Do Risk Premia Protect from Banking Crises?, Macroeconomic Dynamics, 12, 2008, 100-111.
(Hans Gersbach and Jan Wenzelburger)
Working Paper Version
- On the Economics of Crisis Contracts
(Elias Aptus, Volker Britz and Hans Gersbach)
- Private Insurance Against Systemic Crises?
- Banking with Contingent Contracts, Macroeconomic Risks, and Banking Crises