NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Ching-Yi Chung, Gary Richardson

NBER Working Paper No. 12594
Issued in October 2006
NBER Program(s):   DAE   ME

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.

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Document Object Identifier (DOI): 10.3386/w12594

Published: 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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