Depositors' Perception of 'Too-Big-To-Fail'

Review of Finance (2014) doi: 10.1093/rof/rft057

60 Pages Posted: 22 Mar 2011 Last revised: 28 Jan 2014

See all articles by Raquel F. Oliveira

Raquel F. Oliveira

Central Bank of Brazil; Fundação Escola de Comércio Álvares Penteado (FECAP)

Rafael F. Schiozer

Fundação Getulio Vargas/EAESP

Lucas Ayres B. de C. Barros

University of Sao Paulo

Date Written: December 12, 2012

Abstract

We exploit the exogenous shock to the Brazilian banking system caused by the international turmoil of 2008 and find evidence that the run to systemically important banks is better explained by the perception of a too-big-to-fail policy than by bank fundamentals. We infer that the extra inflow of deposits received by systemically important banks during crises gives them an important competitive advantage. Our analysis also indicates that a bank’s share of funding from institutional investors affects the nonfinancial firms’ and institutional investors’ decision to run.

Keywords: financial crisis, too big to fail, deposit insurance, bank run, bailout

JEL Classification: G21, G28

Suggested Citation

Oliveira, Raquel F. and Schiozer, Rafael F. and Barros, Lucas Ayres Barreira de Campos, Depositors' Perception of 'Too-Big-To-Fail' (December 12, 2012). Review of Finance (2014) doi: 10.1093/rof/rft057, Available at SSRN: https://ssrn.com/abstract=1787661 or http://dx.doi.org/10.2139/ssrn.1787661

Raquel F. Oliveira

Central Bank of Brazil ( email )

Av. Paulista, 1804 - 4o andar
Sao Paulo, SP 01310-922
Brazil

Fundação Escola de Comércio Álvares Penteado (FECAP)

Av. Liberdade, 532
Liberdade
São Paulo
Brazil

Rafael F. Schiozer (Contact Author)

Fundação Getulio Vargas/EAESP ( email )

Sao Paulo
Brazil
55 11 32817700 (Phone)
55 11 32841789 (Fax)

HOME PAGE: http://www.fgvsp.br

Lucas Ayres Barreira de Campos Barros

University of Sao Paulo ( email )

Avenida Professor Luciano Gualberto, 908
São Paulo, São Paulo 05508-010
Brazil

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