BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Russian banks´ private deposit interest rates and market discipline
(), A.M. Karminsky and S.V. Golovan
Abstract: This paper examines the extent to which the observed
diversity of private deposit interest rates in Russia is explained by bank
financial indicators. We also test for whether the introduction of the bank
deposit insurance scheme in 2005 affected deposit interest rates. Our
results suggest market discipline in the Russian banking system involves
Russian depositors demanding higher deposit interest rates from banks with
risky financial policies. This discipline seems stronger than in developed
countries. Our study suggests also that the risks taken by banks increased
after introducing the deposit insurance.
Keywords: banking; deposit interest rates; moral hazard; deposit insurance; Russia; (follow links to similar papers)
JEL-Codes: D43; E53; G21; P34; (follow links to similar papers)
30 pages, February 20, 2007
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