The Deposit Business at Large vs. Small Banks

We are grateful for financial support from the Fisher Center for Real Estate and Urban Economics at the Haas School of Business. This paper originally circulated as Chapter 3 of Huang’s dissertation, entitled “Bank Size and Deposit Market Competition,” submitted in May 2023 (Huang, 2023). We thank our conference discussants and participants at the UCLA Anderson Macro Finance lunch, Fall 2021; the Wabash Finance Conference, Summer 2023; the UCLA Anderson Finance Lunch, Fall 2023; NBER Financial Market Frictions and Systemic Risks, March 2024; Rethinking Optimal Deposit Insurance Conference at Yale; the 2024 European Finance Association meetings; the 2025 Jackson Hole Finance Group Conference; the 2024 Western Finance Association meetings; the 2024 FDIC Bank Research Conference; the 2024 Northern Finance Association meetings; the 2024 SITE workshop on Climate Finance and Banking; the 2025 Financial Intermediation Research Society Conference; the San Francisco Fed; the Conference on Frontier Risks, Financial Innovation and Prudential Regulation of Banks; the Stockholm School of Economics; the Sveriges Riksbank; HEC Paris Business School; UNC; Harvard; MIT; the Bank of Italy; and Northwestern Kellogg, for helpful comments and suggestions. Eisfeldt has consulted on matters involving banks. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

• November 7, 2023