Deposit Insurance Review Reveals Risks of Bank Runs and Moral Hazard
The article discusses how deposit insurance affects bank runs and moral hazard. The researchers aim to share their ongoing work quickly, even if it's not fully polished yet. They found that deposit insurance can lead to risky behavior by banks, as they may take more chances knowing their deposits are protected. This can increase the likelihood of bank runs, where many people withdraw their money at once, causing financial instability.