Risk-based deposit insurance in Russia reduces bank failures and improves stability
The article examines how changing deposit insurance in Russian banks affects their stability. When banks take on more risk, they rely less on insured deposits. Private banks with enough capital don't need to offer high insured deposit rates to grow. The cost of insured deposits can predict bank failures. Banks only offer high insured deposit rates as a last resort. This suggests that risk-based deposit insurance can reduce bank risks and make the financial system more stable.