Deposit-only liability insurance in a country with weak rule of law: a case of Indonesia

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 03 June 2014


Coombs Seminar Room B, Coombs Building 9, Fellows Road, ANU


Dr Andrew Schmulow, University of Melbourne.


Arianto Patunru

Indonesia has made momentous strides towards creating rule of law. However that process has a substantial way to go, and until regulatory enforcement is adequate, and the judicial system largely uncorrupted, regulatory enforcement will remain susceptible to corruption and malpractice. Because of the contagious nature of bank failures, if Indonesia were to lose a bank, particularly a major bank, it would again face a financial crisis.

In this seminar, Dr Andrew Schmulow will propose a system of ensuring bank soundness that does not rely on the vagaries of a state, the development of whose legal system is still nascent, but instead incentivises better banking through a system of privately provided depositor’s insurance, in return for a risk-sensitive premium. The focus of Dr Schmulow’s research is therefore on circumventing legal and institutional impediments to reliable prudential regulatory enforcement.

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