Who Can Tell Which Banks Will Fail?

Kristian Blickle, Markus Brunnermeier and Stephan Luck

No 1005, Staff Reports from Federal Reserve Bank of New York

Abstract: We study the run on the German banking system in 1931 to study whether depositors anticipate which banks will fail. We find that deposits decline by around 20 percent 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 while regular depositors are uninformed, banks have precise information about which banks will fail. In turn, banks being informed allows the interbank market to continue providing liquidity even during times of severe financial distress.

Keywords: bank run; deposit insurance; financial crises (search for similar items in EconPapers)
JEL-codes: G01 G21 N20 N24 (search for similar items in EconPapers)
Pages: 74
Date: 2022-02-01
New Economics Papers: this item is included in nep-ban, nep-his, nep-ias and nep-mon
Note: Revised May 2025.
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Citations: View citations in EconPapers (3)

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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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