THE DETERMINATION OF DEPOSIT INSURANCE PREMIUMS WITH A LIMIT COVERAGE
Deposit insurance is an important mechanism in protecting bank customers from the risk of bankruptcy and providing a sense of security for their savings. In the economic system, banks play a crucial role as financial institutions that gather funds from the public and channel them as loans to borr...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/76842 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Deposit insurance is an important mechanism in protecting bank customers from
the risk of bankruptcy and providing a sense of security for their savings. In the
economic system, banks play a crucial role as financial institutions that gather
funds from the public and channel them as loans to borrowers. However, banks
also face risks such as liquidity risk and credit risk, which can disrupt their stability
and operational continuity. Bankruptcy of a bank can lead to significant financial
losses for customers. Therefore, Deposit insurance provides financial protection for
customers in case of bank failures, ensuring they need not worry about losing their
deposits. Under deposit insurance, customers will still receive a refund of their
funds up to a certain limit determined by the deposit insurance agency. In determining
deposit insurance premiums, this study utilizes the Black-Scholes method,
considering the protection limits that will affect the level of risk and premiums
to be charged to banks or financial institutions. The research also presents the
simulation results obtained from the model to examine the relationship between
variables and insurance premium values. Based on sensitivity analysis, It is found
that the premium value is inversely proportional to the interest rate and directly
proportional to the asset price volatility. |
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