Without the Great Depression, the United States would not have adopted deposit insurance. While the New Deal's anti-competitive barriers have largely collapsed become" deeply rooted. This paper examines how market and political competition for deposits raised the level of coverage and spread insurance to all depository institutions. A comparison of the cost of federal insurance with a counterfactual of an insurance-free system shows that federal insurance ultimately imposed a" higher cost but achieved political acceptance because of the distribution of the burden.
*Published: This paper was subsequently published as The Legacy of Deposit Insurance: The Growth, Spread, and Cost of Insuring Financial Intermediaries, Eugene N. White, in NBER book The Defining Moment: The Great Depression and the American Economy in the Twentieth Century (1998)
White, Eugene N. "The Legacy of Deposit Insurance: The Growth, Spread, and
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