Should Deposit Insurance Agencies Have Extended Mandates over Commercial Bank Supervision? The Case of Former Soviet States

Abstract

The paper compares some of the financial indicators of banking institutions from former Soviet States, those representing banking system where deposit insurers have both limited and extended authority to supervise member banks’ performances. Financial indicators are selected to check the risk-taking behaviour of commercial banks. The comparison enables to speak of the efficiency of DIS model with extended mandates of deposit insurers in preserving the stability of banking system.Banking system stability in this case is considered to be preserved by the right and the ability of deposit insurance agencies to force member banks to choose risk-free strategies.