Risk-based deposit insurance premiums ineffective in controlling moral hazard
The article discusses whether risk-based deposit insurance premiums can effectively control banks from taking excessive risks. The main argument is that simply charging higher premiums to riskier banks may not be enough to prevent them from engaging in risky activities, as it is difficult for outsiders to accurately assess a bank's risk profile. The article suggests that additional measures such as performance-based insurance payments and supervisory monitoring are needed to address moral hazard in the banking sector.