1990 Articles

Is Deposit Insurance Necessary? A Historical Perspective

Calomiris, Charles W.

The motivation and structure of various banking insurance experiments in U.S. history are analyzed, along with their political alternative, branch banks. In both the antebellum period and in the 1920s, insurance systems that relied on self-regulation, made credible by mutual liability, were successful, while compulsory state systems were not. Branch banking increased stability and resiliency to shocks.