Depositors Disciplining Banks: The Impact of Scandals

50 Pages Posted: 11 Dec 2018

See all articles by Mikael Homanen

Mikael Homanen

City University London - The Business School; PRI Association

Date Written: November 27, 2018


Do depositors react to negative non-financial information about their banks? By using branch level data for the United States, I show that banks, that financed the highly controversial Dakota Access Pipeline, experienced significant decreases in deposit growth, especially in branches located closest to the pipeline. These effects were greater for branches located in environmentally or socially conscious counties, and data suggests that savings banks were among the main beneficiaries of this depositor movement. Using a global hand-collected dataset on tax evasion, corruption, and environmental scandals related to banks, I show that negative deposit growth as a reaction to scandals is a widespread phenomenon.

Keywords: Depositor Discipline, Bank Scandals, Environment, Tax Evasion, Corruption

JEL Classification: G21, G41, M14

Suggested Citation

Homanen, Mikael, Depositors Disciplining Banks: The Impact of Scandals (November 27, 2018). Chicago Booth Research Paper No. 28, Available at SSRN: or

Mikael Homanen (Contact Author)

City University London - The Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

PRI Association ( email )

25 Camperdown Street
London, E18DZ

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