TY  - JOUR
AU  - Sharpe,William F.
TI  - Bank Capital Adequacy, Deposit Insurance and Security Values, Part I
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 209
PY  - 1977
Y2  - October 1977
UR  - http://www.nber.org/papers/w0209
L1  - http://www.nber.org/papers/w0209.pdf
N1  - Author contact info:
William Sharpe
Graduate School of Business
Stanford University
Stanford, Ca   94305
E-Mail: Sharpe_William@gsb.stanford.edu
AB  - This paper provides a formal setting for the analysis of the capital adequacy of an institution with deposits insured by a third party. An insured depositor has a claim against the institution and a contingent claim against the insurer. This paper analyzes the effect of the riskiness of the asset mix and the relative amount of deposits and capital on the potential liability of the insurer. It shows that an increase in asset risk, holding value constant, increases the value of equity and raises the potential liability of the insurer.
ER  -