Behavior of Corporate Depositors During a Bank Panic

Lucy Chernykh () and Sergey Mityakov ()
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Lucy Chernykh: Department of Finance, Clemson University, Clemson, South Carolina 29634
Sergey Mityakov: Department of Finance, Florida State University, Tallahassee, Florida 32306

Management Science, 2022, vol. 68, issue 12, 9129-9151

Abstract: We use high-frequency data to study access and response to bank-level information by corporate depositors during a banking crisis. We examine a bank panic episode in Russia during the summer of 2004 triggered by the Central Bank of Russia (CBR) announcement to liquidate banks for suspicious operations. Our results support the presence of sophisticated depositor monitoring and discipline. Private information about bank risk is available to depositor-firms with a strong business connection to their bank. Other corporate depositors make withdrawals based on publicly observable bank characteristics. Corporate depositors (both with and without strong business ties to the bank) are also susceptible to rumors floating around the banking community. However, those rumors reflect bank-risk fundamentals. Contagion effects seem to be limited.

Keywords: bank panic; corporate depositors; bank-firm connections; market discipline; regulatory discipline (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:12:p:9129-9151

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