The rapid rise in interest rates across the yield curve has increased the broader public’s interest in the exposure embedded in bank balance sheets and in depositor behavior more generally. In this post, we consider a simple illustration of the potential impact of higher interest rates on measures of bank franchise value.| Liberty Street Economics
How informed or uninformed are bank depositors in a banking crisis? Can depositors anticipate which banks will fail? Understanding the behavior of depositors in financial crises is key to evaluating the policy measures, such as deposit insurance, designed to prevent them. But this is difficult in modern settings. The fact that bank runs are rare and deposit insurance universal implies that it is rare to be able to observe how depositors would behave in absence of the policy. Hence, as empiric...| Liberty Street Economics
A look at bank runs and how they have been a consequence of imminent failure, rather than the original cause, for bank failures in the U.S.| Liberty Street Economics
A look at the predictability of bank failures based on simple accounting metrics from publicly available financial statements that measure insolvency risk.| Liberty Street Economics
A look at why U.S. banks fail, using a study of more than 5,000 bank failures to understand if they are caused by bank runs or deteriorating solvency.| Liberty Street Economics
The authors evaluate how deposits have evolved over the latter portion of the current monetary policy tightening cycle.| Liberty Street Economics
