Two Centuries of Systemic Bank Runs

Rustam Jamilov (), Tobias König, Karsten Müller and Farzad Saidi ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We study bank runs using a novel historical cross-country dataset that covers 184 countries over the past 200 years and combines a new narrative chronology with statistical indicators of bank deposit withdrawals. We document the following facts: (i) the unconditional likelihood of a bank run is 1.2% and that of significant deposit withdrawals 12.7%; (ii) systemic bank runs, i.e. those that are accompanied by deposit withdrawals, are associated with substantially larger output losses than non-systemic runs or deposit contractions alone; (iii) bank runs are contractionary even when they are not triggered by fundamental causes, banks are well-capitalized, and there is no evidence of a crisis or widespread failures in the banking sector; (iv) in historical and contemporary episodes, depositors tend to run on highly leveraged banks, causing a credit crunch, and a reallocation of deposits across banks; and (v) liability guarantees are associated with lower output losses after systemic runs, while having a lender of last resort or deposit insurance reduces the probability of a run becoming systemic. Taken together, our findings highlight a key role for sudden bank liability disruptions over and above other sources of financial fragility.

Keywords: bank runs; financial fragility; deposits; financial crises (search for similar items in EconPapers)
JEL-codes: E44 E58 G01 G21 G28 (search for similar items in EconPapers)
Pages: 262
Date: 2024-08
New Economics Papers: this item is included in nep-his and nep-mon
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Related works:
Working Paper: Two Centuries of Systemic Bank Runs (2024)
Working Paper: Two Centuries of Systemic Bank Runs (2024)
Working Paper: Two Centuries of Systemic Bank Runs (2024)
Working Paper: Two Centuries of Systemic Bank Runs (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2024_589

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