Deposit Insurance and the Composition of Bank Suspensions in Developing Economies: Lessons from the State Deposit Insurance Experiments of the 1920S

Ching-Yi Chung and Gary Richardson

No 12594, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Eight states established deposit insurance systems between 1908 and 1917. All abandoned the systems between 1921 and 1930. Scholars debate the costs and benefits of these policy experiments. New data drawn from the archives of the Federal Reserve Board of Governors demonstrate that deposit insurance influenced the composition of bank suspensions in these states. In typical years, suspensions due to runs fell. Suspensions due to mismanagement rose. During the penultimate year of each system, the bank failure rate rose to an unsustainable height and the system ceased operations.

JEL-codes: E42 E65 L1 N1 N14 O16 (search for similar items in EconPapers)
Date: 2006-10
New Economics Papers: this item is included in nep-ban, nep-ias and nep-mac
Note: DAE ME
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Citations: View citations in EconPapers (1)

Published as Ching-Yi Chung & Gary Richardson, 2006. "Deposit Insurance Altered the Composition of Bank Suspensions during the 1920s: Evidence from the Archives of the Board of Governors," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 0(1).

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