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Having been hailed as the most important contribution to stabilising the US financial system after the 1929—33 crash, deposit insurance is now being blamed for financial destabilisation, particularly in emerging markets. This paper focuses on the relationship between deposit insurance and systemic stability in the banking system, drawing on recent experience in the USA, Europe and Japan. The conclusion is that if there is an embedded perception that in the last resort depositors will be protected beyond insurance limits then market‐orientated solution to the problems of ‘moral hazard’ and excessive risk taking cannot work.

The purpose of this paper is to alleviate the moral hazard problem created by deposit insurance and therefore develop a deposit insurance pricing model explicitly considering systematic risk.

Using the market model, the authors introduce the systematic risk component consisting of market risk and beta risk. A closed-form solution for the authors’ pricing model is derived based on the option pricing framework.

Compared with the authors’, the pricing model that ignores systematic risk underestimates deposit insurance premium, and cannot cover the excessive loss created by systematic risk. To examine the effect of the systematic risk component on the deposit insurance premiums estimated by the authors’ model, this paper also provides empirical evidence from China by regression analysis. The results demonstrate that, in addition to the individual failure risk, the systematic risk component is properly priced and explicitly reflected in the authors’ model.

More risk factors such as liquidity risk should be introduced in the pricing of deposit insurance.

Deposit insurance premiums estimated by the authors’ model can alleviate the moral hazard problem that banks have an incentive to take on excessive systematic risk, because substantial higher insurance premiums would be charged in doing so.

Applying the option pricing theory and market model, this paper develops a deposit insurance pricing model with explicit consideration of systematic risk. The systematic risk component contains not only the market volatility but also the sensitivity of market risk.

This paper aims to provide an essential framework for establishing Shariah-compliant deposit insurance scheme, by reviewing the Shariah provisions concerning the available approaches for deposit guarantee, types of deposits in Islamic financial institutions and the permissible party to incur the cost of this guarantee.

This paper reviews the Fiqh rules and principles approved by the well-known Islamic Fiqh references, as well as the resolutions of International Islamic Fiqh Academy (IIFA) and Shariah standards issued by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), and presents these resolutions and judgments in a modern applicable way.

This paper recommends that the Islamic scheme for deposit insurance should be established based on Takaful insurance principle, and this scheme must adopt fund segregation principle to comply with Shariah provisions for guarantee permissibility.

The paper bridges the gap between theory and practice by highlighting how the proposed model can be initiated in practice, thus, it can influence public policy in countries with Islamic banking system.

This paper represents a significant contribution toward the establishment of a consensual Shariah-compliant Islamic deposit insurance model.

This paper aims to develop a novel approach to Islamic deposit insurance, specifically addressing the deficiencies in the current prevailing models of Islamic deposit insurance.

The analysis in this paper adopts a qualitative content analysis approach to review the existing literature on Islamic deposit insurance and propose a new model.

The proposed model includes a revised scheme. In the event of a bank failure, the funds used to reimburse depositors of the failed bank are divided into two distinct categories. The first category includes nonrepayable premiums that have been previously paid by the failed bank and managed by the Islamic deposit insurance agency or Islamic deposit insurance corporation. The second category comprises qard hasan, an interest-free loan provided by the Islamic deposit insurance agency or Islamic deposit insurance corporation using the deposit insurance funds from the collective pool of premiums of other banks.

The proposed model ensures that well-managed banks are not unfairly burdened by the failures of their poorly managed counterparts, thus preventing a sense of unfairness and inefficiency. Implementing the proposed model may result in higher business practices and risk management standards, ultimately leading to better depositors’ protection and banking system’s stability.

This paper offers a significant contribution to the limited literature on Islamic deposit insurance. The proposed model enriches the discourse and offers valuable insights for the future development of Islamic banking.

Here the author proposes the Mutual Insurance Model with Incentive Compatibility (MIMIC). MIMIC is a model for deposit insurance that mimics the incentives and practices of a private sector, mutual, insurance organisation. The main features of MIMIC are: fully risk‐based premiums, payments by the Federal Deposit Insurance Corporation (FDIC) to the US Treasury Department (the Treasury) for its line of credit and ‘catastrophe insurance’, rebates to banks when the reserve ratio exceeds a risk‐based ceiling, surcharges on banks when the reserve ratio dips below a risk‐based floor, dilution fees on deposit growth to maintain reserve ratio and refunds to banks to maintain reserve ratio when their deposits shrink.

This paper examines the structure of the financial system in the Eastern Caribbean with a view to determining whether deposit insurance is a feasible alternative. It is argued that as the financial system deepens within the context of a liberalised environment the probability of systemic risk increases considerably. Against this backdrop, we find that deposit insurance may have a role to play in the Eastern Caribbean.

The purpose of this paper is to study the optimal coverage limit in a model of deposit insurance with capital requirements and risk sensitive premia to prevent moral hazard.

The theoretical model has incorporated capital requirements, risk‐sensitive premium, and partial deposit insurance in a partial equilibrium model. The model discusses the interaction among risk‐taking banks, ex‐ante heterogeneous depositors, and a deposit insurer.

First, the paper shows that optimal coverage encourages depositors' monitoring and withdrawals. Partial deposit insurance improves social welfare. Second, risk‐sensitive premia and market discipline are essential to reduce bank risk taking behavior. Third, adjustment between level of coverage and the premium guarantees long term liquidity of the deposit insurance funds and makes banks better off. Fourth, numerical findings are consistent with the empirical evidence that shows differences in coverage between countries.

Timing and frequency of adjustments to coverage limits and the implementation of co‐insurance have been beyond the scope of this study but those implications are worth further investigation.

In the current crisis, banking regulations combined with poor management and supervision have been responsible for banks' improper leverages, lending and securitization. A bank failure could easily turn into a crisis when the financial institution is overly exposed to credit risks and when the government is least equipped to deal with those risks. Thus, the study of the partial deposit insurance is important in achieving stability in the banking sector.

The purpose of this paper is to investigate a deposit insurance program for household deposits, which is designed to act as safety net in order to minimize or eliminate the risk of loss of depositors' funds with banks represents a primary element of this reform.

This research paper is scientific investigation aimed at discovering and interpreting facts related to deposit insurance system in Azeri context. The goal of the research process is to produce new knowledge, through the exploratory research, which structures and identifies new problems, and the constructive research, which develops solutions to a problem.

The main finding is that the deposit insurance system in Azeri context as well everywhere provides for the security of funds in the event of bank failure and, thus, contributes substantially to the stability of the financial system in Azerbaijan. The deposit insurance system supports the smooth functioning of the payment system and the credit mechanisms and facilitates the exit of problem banks.

As a result of this research paper some changes may be made in local legislation in order to defend the depositor's rights in the most effective way in the case of bank failures.

The originality of this paper is that it for the first time describes the deposit insurance system of the Republic of Azerbaijan, its advantages and disadvantages. The paper is addressed to the international business community, particularly those involved in all aspects of banking and deposit insurance law.

The purpose of this paper is to explore the full potential of an effective deposit insurance system. The current financial crisis in Europe has arguably casted fresh doubt on the role and need for deposit insurance. In this regard, the deposit insurance system’s rationale is a key starting issue in order to fully understand its design and role within a financial safety net system.

Using the UK regulatory regime as the main reference point, the deposit insurance system’s objectives are divided into two broad categories: depositor protection and financial stability.

It is argued that a deposit insurance system could only be effective if designed to perform key regulatory objectives. Otherwise, authorities will keep resorting to other rescue measures, as this system will never be well equipped to respond to a bank failure.

Notwithstanding recent regulatory reforms, there is still a lack of clear objectives and, thus, a clear profile for the Financial Services Compensation Scheme, as the UK deposit compensation scheme. In light of systemic risk and increased demands on prudential banking regulation, the UK deposit insurance system should be reformed to perform significant regulatory objectives.

The further reform of the UK deposit insurance will enhance depositor protection and financial stability, especially amid the euro-crisis.

An effective reform of deposit insurance requires a clear role-setting for deposit insurance. To this end, this paper offers a comprehensive analysis of all regulatory objectives that the post-crisis UK deposit insurance system should serve.

The purpose of this paper is to explore the arrangements that have been used in the present crisis and their relative success and to look to the post‐crisis situation.

The paper examines and explains the crisis and the roles of deposit insurance and government guarantees. It deals with coverage, funding, institutional structure, speed of payout, incentives, accountability and, in particular, considers how such systems should function in a world of cross‐border institutions.

The paper suggests how such principles and standards should be set either through International Association of Deposit Insurers or some more efficient means to complement an international approach to financial stability being addressed by the Basel institutions.

There is no widely accepted standard over what the reformed financial system safety net should look like with respect to the protection of deposits and the wider guaranteeing of creditors and other stakeholders. This paper, therefore, makes an attempt to fill that gap.