The framework for managing bank failures includes deposit insurance systems (DIS), which play a significant role. The distribution of insured deposits in the context of a bank closure and insolvency procedure is the primary use of DIS resources. This lowers the possibility of depositor runs and guarantees that depositors who are protected can still access their money.

The sharp decline in bank failures following the implementation of federal deposit insurance was regarded as evidence of its success. From 1934 through 1941, the FDIC handled 370 bank failures, the majority of which were minor banks. With the exception of the first year of operation, the corporation enjoyed positive net income, and the insurance fund kept expanding. The fund balance represented 1.96 percent of insured deposits by the end of 1941, the highest reserve ratio in FDIC history. The better economic conditions, which have significantly improved the financial conditions