In 1910, Texas instituted a highly unique deposit insurance program for its state chartered banks consisting of two separate plans: the depositors guaranty fund, similar in operation to the deposit insurance schemes adopted in several other states; and the depositors bond security system, which...

In his comment on our 2002 Journal of Economic History paper, Gary Richardson (2007) proposes that our work specifies moral hazard too narrowly. Richardson posits that fixed-rate deposit insurance leads to moral hazard which takes many forms. These include not only the usual notion of...

This paper uses historical data on Texas banks to examine one possible reform to government-provided deposit insurance, increased reliance on market incentives. The Texas experience is unusual because banks faced two options under which they could join a state-mandated deposit insurance program,...