This paper provides an empirical investigation of the effect of deposit insurance and other institutional and economic variables on bank interest rates across countries. Hence, it adds to a starting but growing literature devoted to test different hypothesis regarding the effects of deposit insurance on the stability of the banking system, on market discipline, and on the development of large and efficient financial markets (see Demirguc-Kunt and Kane, 2002, for a survey). It is also related to the literature on the deep determinants of economic growth, which emphasizes the role of institutions as a driving force of economic.
