Double the Insurance, Double the Funds?

40 Pages Posted: 13 Oct 2020 Last revised: 10 Aug 2021

Date Written: August 1, 2021


The Depositors Insurance Fund and Share Insurance Fund, private organizations in Massachusetts, have provided a full guarantee on deposits held at member Massachusetts state-chartered savings and cooperative institutions since 1934. I instrument for the choice to participate in these funds using two unique instrumental variables and find that member institutions held approximately one-third more deposits over the Federal Deposit Insurance Corporation limit when compared to similar state institutions. In addition, I find that member institutions experienced a larger flight to deposits than nonmember institutions during the financial crisis and recession. These results show that private deposit insurance might lessen concerns of deposit loss and reduce the burden on federal emergency guarantee programs.

Keywords: deposits, deposit insurance, Depositors Insurance Fund, Share Insurance Fund, Federal Deposit Insurance Corporation

JEL Classification: G21, G28, G01

Suggested Citation

Stone, Anna-Leigh, Double the Insurance, Double the Funds? (August 1, 2021). Journal of Banking and Finance, Forthcoming, Available at SSRN: or

Anna-Leigh Stone (Contact Author)

Samford University ( email )

800 Lakeshore Drive
Birmingham, AL 35229
United States

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