Title

Implicit Deposit Insurance and Deposit Guarantees: Characteristics of Australian Bank Risk Premia

Publication Title

Accounting and Finance

Publication Date

7-1998

Document Type

Article

DOI

10.1111/1467-629X.00006

Keywords

deposits, banking, Australia

Disciplines

Finance and Financial Management

Abstract

This paper examines the hypothesis that CD issue yields of Australian banks incorporate a premium that reflects bank risk. Our empirical analysis of Australian banks’ CD premiums suggests the data is consistent with this hypothesis and hence supports the view that CD holders do not perceive their deposits as being risk-free. Nor do we find any statistically significant difference between the premiums paid by private banks with implicit deposit insurance vis-a-vis those paid by government-owned banks with explicit government guarantees.


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