Regulation and bank failures: new evidence from the agricultural collapse of the 1920's
AbstractThis article examines the contribution of government policies to the high number of bank failures in the United States during the l920s. I consider the state of Kansas, which had a system of voluntary deposit insurance and where branch banking was strictly prohibited, and find that bank failure rates were highest in counties suffering the greatest agricultural distress and where deposit insurance system membership was the highest. The evidence for Kansas illustrates how prohibitions on branch banking caused unit banks to be especially susceptible to local economic shocks, and suggests that, despite regulations to limit risktaking, deposit insurance caused more bank failures than would have occurred otherwise.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1991-006.
Date of creation: 1991
Date of revision:
Publication status: Published in Journal of Economic History, v. 52, no. 4 (December 1992) pp. 806-825
Other versions of this item:
- Wheelock, David C., 1992. "Regulation and Bank Failures: New Evidence from the Agricultural Collapse of the 1920s," The Journal of Economic History, Cambridge University Press, vol. 52(04), pages 806-825, December.
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