Abstract
Abstract I use the introduction of deposit insurance in eight U.S. states in the early twentieth-century to study the effects of deposit insurance on the banking system. Using a triple difference approach exploiting regulatory differences between national and state banks and between states, I find that insured banks experienced higher deposit growth and decreased funding costs. I also observe a replacement of demand deposits by riskier time deposits. However, I find no aggregate effects on failure rates or risk-taking. Using hand-collected micro-level data, I show that small and large banks reacted differently and that banks facing funding problems especially benefited. Received July 20, 2017; editorial decision November 12, 2018 by Editor Efraim Benmelech.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
