The Legacy of Deposit Insurance: The Growth, Spread, and Cost of Insuring Financial Intermediaries

56 Pages Posted: 18 Jun 2000 Last revised: 28 Jul 2022

See all articles by Eugene N. White

Eugene N. White

Rutgers University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 1997

Abstract

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.

Suggested Citation

White, Eugene Nelson, The Legacy of Deposit Insurance: The Growth, Spread, and Cost of Insuring Financial Intermediaries (June 1997). NBER Working Paper No. w6063, Available at SSRN: https://ssrn.com/abstract=226473

Eugene Nelson White (Contact Author)

Rutgers University - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States