Federal Dposit InsuranceCorporation• Center for Financial Researchh
Sanjiv R. Das
Darrell Duffie
Nikunj Kapadia
Risk-Based Capital Standards,
Deposit Insurance and Procyclicality
Risk-Based Capital Standards,
Deposit Insurance and Procyclicality
FDIC Center for Financial Research
Working Paper
No. 2010-07
The Effect of Banking Crises on Deposit Growth:
State-Level Evidence from 1900 to 1930
July 2010
Empirical Comparisons and Implied Recovery Rates
kkk
An Empirical
An Empirical Analysis
State-
Efraim Benmel Efraim Benmelech May, 2005
June 20
May , 2005 Asset S2005-14
September 2005
Sanjiv R. Das
Darrell Duffie
Nikunj Kapadia
Risk-Based Capital Standards,
Deposit Insurance and Procyclicality
Risk-Based Capital Standards,
Deposit Insurance and Procyclicality
FDIC Center for Financial Research
Working Paper
No. 2010-07
The Effect of Banking Crises on Deposit Growth:
State-Level Evidence from 1900 to 1930
July 2010
Empirical Comparisons and Implied Recovery Rates
kkk
An Empirical
An Empirical Analysis
State-
Efraim Benmel Efraim Benmelech May, 2005
June 20
May , 2005 Asset S2005-14
September 2005
The Effect of Banking Crises on Deposit Growth:
State-Level Evidence from 1900 to 1930
Carlos D. Ramirez*
Department of Economics
George Mason University
Fairfax, VA 22030-4444
cramire2@gmu.edu
and
Center for Financial Research
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
caramirez@fdic.gov
Revised: July 2010
Abstract:
Using a newly constructed database of bank failures for the period 1900 to 1930, this
paper estimates a dynamic regression model to examine the extent to which banking
instability at the state level affects the proportion of state deposits relative to national
deposits. The main results indicate that banking failures reduce the proportion of state
deposits by approximately 0.04 percent in the short run and by nearly 1 percent in the
long run. In the eight states that adopted deposit insurance systems during the late 1910s
and the 1920s, however, I find no evidence that banking crises affected deposit growth.
Furthermore, I find no evidence that the banking crisis of the 1980s and 1990s had any
significant effect on state deposit growth. These results suggest that deposit insurance
may have lessened the effects of banking instability on deposit growth.
* I would like to thank, without implicating, Lee Davison for comments that helped frame this paper, as
well as Ashley Carreon for very valuable research assistance. I would also like to thank the FDIC‘s Center
for Financial Research for logistical and financial support. The paper‘s findings and conclusions do not
necessarily represent those of the Federal Deposit Insurance Corporation.
State-Level Evidence from 1900 to 1930
Carlos D. Ramirez*
Department of Economics
George Mason University
Fairfax, VA 22030-4444
cramire2@gmu.edu
and
Center for Financial Research
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
caramirez@fdic.gov
Revised: July 2010
Abstract:
Using a newly constructed database of bank failures for the period 1900 to 1930, this
paper estimates a dynamic regression model to examine the extent to which banking
instability at the state level affects the proportion of state deposits relative to national
deposits. The main results indicate that banking failures reduce the proportion of state
deposits by approximately 0.04 percent in the short run and by nearly 1 percent in the
long run. In the eight states that adopted deposit insurance systems during the late 1910s
and the 1920s, however, I find no evidence that banking crises affected deposit growth.
Furthermore, I find no evidence that the banking crisis of the 1980s and 1990s had any
significant effect on state deposit growth. These results suggest that deposit insurance
may have lessened the effects of banking instability on deposit growth.
* I would like to thank, without implicating, Lee Davison for comments that helped frame this paper, as
well as Ashley Carreon for very valuable research assistance. I would also like to thank the FDIC‘s Center
for Financial Research for logistical and financial support. The paper‘s findings and conclusions do not
necessarily represent those of the Federal Deposit Insurance Corporation.