Who Can Tell Which Banks Will Fail?

Kristian Blickle, Markus Brunnermeier and Stephan Luck

No 29753, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the run on the German banking system in 1931 to understand whether depositors anticipate which banks will fail in a major financial crisis. We find that deposits decline by around 20% during the run. There is an equal outflow of retail and non-financial wholesale deposits from both failing and surviving banks. In contrast, we find that interbank deposits decline almost exclusively for failing banks. Our evidence suggests that banks are better informed about which fellow banks will fail. In turn, banks being informed allows the interbank market to continue providing liquidity even during times of severe financial distress.

JEL-codes: G20 G21 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cwa, nep-his, nep-ias and nep-mon
Note: AP CF
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Who Can Tell Which Banks Will Fail? (2024)
Working Paper: Who Can Tell Which Banks Will Fail? (2022)
Working Paper: Who Can Tell Which Banks Will Fail? (2022)
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