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State-Sponsored Insurance of Bank Deposits in the United States, 1907–1929

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  • White, Eugene Nelson

Abstract

Before the creation of the Federal Deposit Insurance Corporation in 1933, several states established deposit guarantee funds. The key factor influencing the adoption of deposit insurance by a state was the structure of its banking industry. In states where small unit banks were dominant, there was strong support for guarantee funds to protect deposits; in other states there was more interest in branch banking. The failure to design the guarantee funds in accordance with sound principles of insurance brought about their demise and led to increased branch banking.

Suggested Citation

  • White, Eugene Nelson, 1981. "State-Sponsored Insurance of Bank Deposits in the United States, 1907–1929," The Journal of Economic History, Cambridge University Press, vol. 41(3), pages 537-557, September.
    • Handle: RePEc:cup:jechis:v:41:y:1981:i:03:p:537-557_04
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    Cited by:

    1. Rockoff, Hugh, 2022. "Milton Friedman on bailouts," Journal of Financial Stability, Elsevier, vol. 63(C).
    2. Marvin Goodfriend, 1991. "Money, credit, banking, and payments system policy," Economic Review, Federal Reserve Bank of Richmond, vol. 77(Jan), pages 7-23.
    3. Economides, Nicholas & Hubbard, R Glenn & Palia, Darius, 1996. "The Political Economy of Branching Restrictions and Deposit Insurance: A Model of Monopolistic Competition among Small and Large Banks," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 667-704, October.
    4. Raghuram Rajan & Rodney Ramcharan, 2015. "The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s," American Economic Review, American Economic Association, vol. 105(4), pages 1439-1477, April.
    5. Charles W. Calomiris & Matthew Jaremski, 2016. "Deposit Insurance: Theories and Facts," Annual Review of Financial Economics, Annual Reviews, vol. 8(1), pages 97-120, October.
    6. Danisewicz, Piotr & Lee, Chun Hei & Schaeck, Klaus, 2022. "Private deposit insurance, deposit flows, bank lending, and moral hazard," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    7. Rajeev Dehejia & Adriana Lleras-Muney, 2007. "Financial Development and Pathways of Growth: State Branching and Deposit Insurance Laws in the United States, 1900–1940," Journal of Law and Economics, University of Chicago Press, vol. 50(2), pages 239-272.
    8. Liangliang Jiang & Ross Levine & Chen Lin & Wensi Xie, 2022. "Deposit Supply and Bank Transparency," Management Science, INFORMS, vol. 68(5), pages 3834-3855, May.
    9. Michael D. Bordo, 1990. "The lender of last resort : alternative views and historical experience," Economic Review, Federal Reserve Bank of Richmond, vol. 76(Jan), pages 18-29.
    10. Kane, Edward J., 1997. "Making bank risk shifting more transparent," Pacific-Basin Finance Journal, Elsevier, vol. 5(2), pages 143-156, June.

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