Federal Deposit Insurance Corporation
Institutional Affiliation: Federal Deposit Insurance Corporation
NBER Working Papers and Publications
|May 2018||Deposit Inflows and Outflows in Failing Banks: The Role of Deposit Insurance|
with Manju Puri, Alexander Ufier: w24589
Using unique, daily, account-level balances data we investigate deposit stability and the drivers of deposit outflows and inflows in a distressed bank. We observe an outflow of uninsured depositors from the bank following bad regulatory news. We find that government deposit guarantees, both regular deposit insurance and temporary deposit insurance measures, reduce the outflow of deposits. We also characterize which accounts are more stable (e.g., checking accounts and older accounts). We further provide important new evidence that, simultaneous with the run-off, gross funding inflows are large and of first-order impact — a result which is missed when looking at aggregated deposit data alone. Losses of uninsured deposits were largely offset with new insured deposits as the bank approache...