Depositor market discipline: New evidence from selling failed banks

Philip Molyneux, Vineet Upreti and Tim Zhou

International Review of Financial Analysis, 2023, vol. 89, issue C

Abstract: This paper studies depositor behavior following the acquisition of failed banks by healthy banks in FDIC-supervised transactions. Using a US bank branch-based dataset spanning 2007 to 2014 we find that failed bank depositors discipline acquiring banks post-resolution. This appears to be related to features of the acquiring banks' asset quality and loan composition, but it may also be linked to irrational desciplinary behavior or post acquisition integration issues. We also find some evidence that depositor market discipline may have an impact on the competitive fetaures of local banking markets post resolution.

Keywords: FDIC; Banks; Resolution; Market discipline; Depositors (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:89:y:2023:i:c:s1057521923002831

DOI: 10.1016/j.irfa.2023.102767

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