Deposit insurance systems prevent systemic banking panics
Deposit insurance systems are widely recognized in financial economics and policy literature as an effective mechanism for preventing systemic banking panics by protecting depositors from losses, though they can introduce moral hazard concerns.
The retrieved literature includes papers affirming that deposit insurance successfully prevents bank runs and promotes stability (e.g., papers 0 and 7), while other papers in the set discuss entirely separate macroeconomic or monetary issues (like bond programs, Fed fiscal roles, or interest rates) without refuting the core premise.
Antoine Martin. Liquidity Provision vs. Deposit Insurance: Preventing Bank Panics Without Moral Hazard. 2001. https://doi.org/10.2139/ssrn.293829
The paper explicitly notes that deposit insurance is designed to prevent bank runs, even though it highlights a trade-off with moral hazard.
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THOMAS A. ROSE. 11B. Report from the Federal Deposit Insurance Corporation: National Deposit Insurance Has Worked to Promote Banking Stability. 1997. https://doi.org/10.5089/9781557755032.071.ch016
The report outlines how national deposit insurance has functioned historically to promote banking stability and prevent panics.
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