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Deposit Insurance Altered the Composition of Bank Suspensions during the 1920s: Evidence from the Archives of the Board of Governors


  • Chung Ching-Yi

    () (Central Bank of China)

  • Richardson Gary

    () (University of California, Irvine)


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.

Suggested Citation

  • Chung Ching-Yi & Richardson Gary, 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, De Gruyter, vol. 5(1), pages 1-44, December.
  • Handle: RePEc:bpj:bejeap:v:contributions.5:y:2006:i:1:n:34

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    Cited by:

    1. Davison, Lee K. & Ramirez, Carlos D., 2014. "Local banking panics of the 1920s: Identification and determinants," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 164-177.
    2. Mitchener, Kris James & Richardson, Gary, 2013. "Does “skin in the game” reduce risk taking? Leverage, liability and the long-run consequences of new deal banking reforms," Explorations in Economic History, Elsevier, vol. 50(4), pages 508-525.
    3. Haelim Park Anderson & Gary Richardson & Brian S. Yang, 2017. "Deposit Insurance and Depositor Monitoring: Quasi-Experimental Evidence from the Creation of the Federal Deposit Insurance Corporation," NBER Working Papers 23828, National Bureau of Economic Research, Inc.
    4. Jaremski, Matthew & Wheelock, David C., 2017. "Banking on the Boom, Tripped by the Bust: Banks and the World War I Agricultural Price Shock," Working Papers 2017-36, Federal Reserve Bank of St. Louis.
    5. Kupiec, Paul H. & Ramirez, Carlos D., 2013. "Bank failures and the cost of systemic risk: Evidence from 1900 to 1930," Journal of Financial Intermediation, Elsevier, vol. 22(3), pages 285-307.

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