Deposit insurance, capital adequacy requirements and interest rate dynamics

Article Abstract:

The relationship between deposit insurance and bank deposit rates in a long-run equilibrium state and a very general premium structure is investigated. A price discrimination model similar to that of Lott and Roberts showed that competition between banks would establish a relationship between insured and uninsured deposit rates with the size of the insurance premium. Also, analysis of the time series characteristics of insured and uninsured interest rates revealed that these rates, including deposit insurance premiums, are cointegrated series.

Banking Institutions, Depository Credit Intermediation, DEPOSITORY INSTITUTIONS, Banking industry, Economic aspects, Banks (Finance), Interest rates, Deposit insurance

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Unearned performance fees

Article Abstract:

A new paradigm for perceiving performance fees is proposed. Closed-form expressions for the value and expected value of the performance fee of a generic structure are forwarded. Results show that the expected unearned performance fee can be significantly reduced through simple procedures. Results also show that the expected unearned performance fee can be negative for talented managers.

Evaluation, Investments, Performance contracts

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