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Banking With and Without Deposit Insurance: Mexico's Banking Experiments, 1884-2004

work, Entrepreneurship, and finance

The author examines the long history of banking regulation in Mexico from 1884-2004. He identifies three "experiments" in Mexico's banking history (1884-1911, 1924-1982, 1991-1996) during which banking regulation and the political environment differed, and analyzes reasons why deposit insurance was or was not adopted in each. He observes that unlimited deposit insurance requires effective corporate governance and regulation, that government-run development banks may implicitly substitute for deposit insurance when it is absent, and that the existence of a stable banking system is possible even when deposit insurance does not exist.

266wp.pdf (216.66 KB)
Stephen Haber
Publication Date
November, 2005