Wednesday, May 12, 2010

Your Deposits Are Safe

…from 1 January next year, at least if you have less than RM250,000. Perbadanan Insurans Deposit Malaysia is also working on a similar protection scheme for insurance and takaful policy holders.

There’s always a potential moral hazard issue with a deposit insurance scheme – since depositors are protected from bad management by banks, that might make banks more willing to take on more risks. On the whole however, the empirical evidence is mum on this issue in the nearly 80 years such schemes have been used.

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