Depending on whether banks and non-bank financial markets are complementary or replacements, and on whether theory has divergent opinions, will determine whether and how the introduction of deposit insurance influences the development of non-bank financial markets. We discover that the implementation of deposit insurance slows down the equities market, the non-bank depositaries sector, and the banking industry when law and order is weak. We do this by using data from 134 countries over a 28-year period and many identification methodologies.
