NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Rajkamal Iyer

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

Working Papers and Chapters

May 2013Do Depositors Monitor Banks?
with Manju Puri, Nicholas Ryan: w19050
We use unique micro-level depositor data for a bank that faced a run due to a shock to its solvency to study whether depositors monitor banks. Specifically, we examine depositor withdrawal patterns in response to a timeline of private and public signals of the bank's financial health. In response to a public announcement of the bank's financial troubles, we find depositors with uninsured balances, depositors with loan linkages and staff of the bank are far more likely to run. Even before the run, a regulatory audit, which was in principle private information, found the bank insolvent. We find that depositors act on this private information and withdraw in a pecking order beginning at the time of the regulatory audit, with staff moving first, followed by uninsured depositors and finally ...
May 2010Are there Cultural Determinants of Entrepreneurship?
with Antoinette Schoar
in International Differences in Entrepreneurship, Josh Lerner and Antoinette Schoar, editors
August 2009Screening Peers Softly: Inferring the Quality of Small Borrowers
with Asim Ijaz Khwaja, Erzo F.P. Luttmer, Kelly Shue: w15242
The recent banking crisis highlights the challenges faced in credit intermediation. New online peer-to-peer lending markets offer opportunities to examine lending models that primarily cater to small borrowers and that generate more types of information on which to screen. This paper evaluates screening in a peer-to-peer market where lenders observe both standard financial information and soft, or nonstandard, information about borrower quality. Our methodology takes advantage of the fact that while lenders do not observe a borrower's exact credit score, we do. We find that lenders are able to predict default with 45% greater accuracy than what is achievable based on just the borrower's credit score, the traditional measure of creditworthiness used by banks. We further find that lenders ef...
August 2008Understanding Bank Runs: The Importance of Depositor-Bank Relationships and Networks
with Manju Puri: w14280
We use a unique, new, database to examine micro depositor level data for a bank that faced a run. We use minute-by-minute depositor withdrawal data to understand the effectiveness of deposit insurance, the role of social networks, and the importance of bank-depositor relationships in influencing depositor propensity to run. We employ methods from the epidemiology literature which examine how diseases spread to estimate transmission probabilities of depositors running, and the significant underlying factors. We find that deposit insurance is only partially effective in preventing bank runs. Further, our results suggest that social network effects are important but are mitigated by other factors, in particular the length and depth of the bank-depositor relationship. Depositors with longer r...

Published: Rajkamal Iyer & Manju Puri, 2008. "Understanding bank runs: the importance of depositor-bank relationships and networks," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 280-281.

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
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