The effect of deposit guarantee in reducing financial default - the Iraqi Deposit Insurance Company as a model

Abstract

Bank deposit insurance companies have become one of the most important mechanisms for dealing with financial insolvency, as this research deals with the role played by these companies to protect depositors’ money and protect banks from financial insolvency, through a questionnaire submitted to a sample of commercial banks operating in Iraq, where a set of conclusions was reached. The most important of which is that the deposit guarantee system seeks to restore confidence in the banking system and achieve financial stability, thus enhancing the important role provided by the financial authorities in the country, and reducing risks, especially those risks that cannot be avoided, whether political or economic. About financial stability, it is necessary to strengthen the banking supervision activity and to put in place special devices that monitor the work of banks to avoid risks, especially the moral (moral) risks that may arise with the existence of the deposit guarantee system.