Optimal Deposit Insurance

We would like to thank Anat Admati, Alberto Bisin, Peter Diamond, Emmanuel Farhi, Xavier Freixas, Douglas Gale, Gary Gorton, Kinda Hachem, Todd Keister, Deborah Lucas, Gregor Matvos, Cecilia Parlatore, Manju Puri, Juan Carlos Quintero, Adriano Rampini, Johannes Stroebel, Javier Suarez, Alexander Ufier, Tanju Yorulmazer and our discussants Hengjie Ai, Ugo Albertazzi, Sebastian Di Tella, Huberto Ennis, Maryam Farboodi, Martin Oehmke, Giorgia Piacentino, Rafael Repullo, Suresh Sundaresan, and Francesca Zucchi for very helpful comments. We would like to especially thank Doug Diamond for detailed feedback and for discussing the paper twice. We would also like to thank seminar participants at the Financial Intermediation Barcelona GSE Summer Forum, NYU Financial Economics Workshop, NYU Stern/NY Fed Financial Intermediation Conference, Stanford GSB Financial Regulation Conference, University of Virginia, Minnesota Corporate Finance Conference, FIRS Lisbon Conference, NBER SI Corporate Finance, AFA Chicago Meetings, International Association of Deposit Insurers (IADI) Conference, Bank of Italy/Bocconi Financial Stability and Regulation Conference, Maryland/Fed Board Short Term Funding Markets Conference, Wisconsin Finance Junior Conference, Federal Deposit Insurance Corporation (FDIC), Diamond-Dybvig 36th Anniversary Conference at Washington University in St. Louis, and AEA San Diego Meetings. Luke Min, Ryungha Oh, and Flint O'Neil provided excellent research assistance. Itay Goldstein has been retained by a law firm as an expert on a case involving a liquidity crisis and government intervention in a European bank. This case has not influenced the research in this paper, and the research in this paper has not influenced the case. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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