This paper tests whether deposit insurance promotes financial depth by influencing depositor behavior. To do so, we rely on two schemes operating in the U.S. during the 1920s: the Postal Savings System and the deposit insurance schemes that some states had adopted. We exploit the discontinuity...

Existing research generally finds that the magnitude of the effect of supervisory rating shocks on real economic activity is small and short-lived. This is puzzling because corrective actions addressing weaknesses in underwriting and other practices frequently include lending restrictions and...