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Tracing Bank Runs in Real Time

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Abstract

We use high-frequency interbank payments data to trace deposit flows in March 2023 and identify twenty-two banks that suffered a run, significantly more than the two that failed but fewer than the number that experienced large negative stock returns. The runs were driven by large (institutional) depositors, rather than many small (retail) depositors. While the runs were related to weak fundamentals, we find evidence for the importance of coordination because run banks were disproportionately publicly traded and many banks with similarly bad fundamentals did not suffer a run. Banks that survived a run did so by borrowing new funds and then raising deposit rates, not by selling liquid securities.

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  • Marco Cipriani & Thomas M. Eisenbach & Anna Kovner, 2024. "Tracing Bank Runs in Real Time," Working Paper 24-10, Federal Reserve Bank of Richmond.
    • Handle: RePEc:fip:fedrwp:98842
    DOI: 10.21144/wp24-10
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    1. David P. Glancy & Felicia Ionescu & Elizabeth C. Klee & Antonis Kotidis & Michael Siemer & Andrei Zlate, 2024. "The 2023 Banking Turmoil and the Bank Term Funding Program," Finance and Economics Discussion Series 2024-045, Board of Governors of the Federal Reserve System (U.S.).

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    More about this item

    Keywords

    bank runs; payments; coordination; public signals;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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