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What Should Banks Really Do?

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  • LAWRENCE J. WHITE

Abstract

With banking currently in turmoil, a new formula for bank structure and activities, for deposit insurance, and for bank regulation is necessary. This paper reviews the dilemmas of the current structure of banking in the United States and explains how the banking sector arrived at its current state of crisis. It then suggests three alternative formulas, along with their advantages and disadvantages, that could provide the future framework for banking, deposit insurance, and regulation.

Suggested Citation

  • Lawrence J. White, 1992. "What Should Banks Really Do?," Contemporary Economic Policy, Western Economic Association International, vol. 10(3), pages 104-112, July.
    • Handle: RePEc:bla:coecpo:v:10:y:1992:i:3:p:104-112
    DOI: 10.1111/j.1465-7287.1992.tb00240.x
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    References listed on IDEAS

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    1. George J. Benston & George G. Kaufman, 1988. "Risk and solvency regulation of depository institutions: past policies and current options," Staff Memoranda 88-1, Federal Reserve Bank of Chicago.
    2. Keeley, Michael C, 1990. "Deposit Insurance, Risk, and Market Power in Banking," American Economic Review, American Economic Association, vol. 80(5), pages 1183-1200, December.
    3. White, Lawrence J, 1989. "The Reform of Federal Deposit Insurance," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 11-29, Fall.
    4. James R. Barth, 1991. "The Great Savings and Loan Debacle," Books, American Enterprise Institute, number 918256, September.
    5. Edwards, Linda N & Edwards, Franklin R, 1974. "Measuring the Effectiveness of Regulation: The Case of Bank Entry Regulation," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 445-460, October.
    6. John H. Boyd & Arthur J. Rolnick, 1988. "A case for reforming federal deposit insurance," Annual Report, Federal Reserve Bank of Minneapolis.
    7. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    8. Rolnick, Arthur J & Weber, Warren E, 1983. "New Evidence on the Free Banking Era," American Economic Review, American Economic Association, vol. 73(5), pages 1080-1091, December.
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    Cited by:

    1. Lawrence J. White, 1993. "What Should Banks Really Do?: Reply," Contemporary Economic Policy, Western Economic Association International, vol. 11(4), pages 111-113, October.
    2. George S. Berger, 1993. "What Should Banks Really Do?: Comment," Contemporary Economic Policy, Western Economic Association International, vol. 11(4), pages 107-110, October.

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