| Summary: |
This research tries to answer a problem that commonly rises in the Deposit Insurance
system which is still new, the right value of coverage limit for the Deposit Insurance
system in Indonesia. The coverage limit which is too high will encourage moral
hazard from the IDIC banks to the IDIC, while the coverage limit which is too low
can affect the stability of the financial system of a country. The results of the study
show that the coverage limit of IDR 100 million per account and 1 billion per account
indicates the occurrence of moral hazard from the banks of the IDIC to the IDIC.
However, the results also show that the encouragement toward moral hazard behavior
from the banks of the IDIC to the IDIC is not too big when the coverage limit is up to
IDR 100 million per account. Thus, the results and the model of this research can be
used as a consideration by the Deposit Insurance agency (LPS) in determining the
optimal coverage limit
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