Managing Stigma during a Financial Crisis

Sriya Anbil
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Sriya Anbil: https://www.federalreserve.gov/econres/sriya-l-anbil.htm

No 2017-007, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: How should regulators design effective emergency lending facilities to mitigate stigma during a financial crisis? I explore this question using data from an unexpected disclosure of partial lists of banks that secretly borrowed from the lender of last resort during the Great Depression. I find evidence of stigma in that depositors withdrew more deposits from banks included on the lists in comparison with banks left off the lists. However, stigma dissipated for banks that were revealed earlier after subsequent banks were revealed. Overall, the results suggest that an emergency lending facility that never reveals bank identities would mitigate stigma.

Keywords: Great Depression; Central bank; Financial crisis; Stigma (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2017-02
New Economics Papers: this item is included in nep-cba
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2017-07

DOI: 10.17016/FEDS.2017.007

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