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Behavior of Corporate Depositors During a Bank Panic

Author

Listed:
  • Lucy Chernykh

    (Department of Finance, Clemson University, Clemson, South Carolina 29634)

  • Sergey Mityakov

    (Department of Finance, Florida State University, Tallahassee, Florida 32306)

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.

Suggested Citation

  • Lucy Chernykh & Sergey Mityakov, 2022. "Behavior of Corporate Depositors During a Bank Panic," Management Science, INFORMS, vol. 68(12), pages 9129-9151, December.
    • Handle: RePEc:inm:ormnsc:v:68:y:2022:i:12:p:9129-9151
    DOI: 10.1287/mnsc.2022.4304
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    References listed on IDEAS

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