Do Banks Worry About Attentive Depositors? Evidence from Multiple-Brand Banks

60 Pages Posted: 13 Jul 2020 Last revised: 27 Jan 2021

See all articles by Matthieu Chavaz

Matthieu Chavaz

Independent

Pablo Slutzky

University of Maryland - Robert H. Smith School of Business

Date Written: January 26, 2021

Abstract

We study the impact of occasional panic-based (non-fundamental) spikes in public attention towards banks. We show that during the Global Financial Crisis, UK banks facing surges in attention respond by increasing retail deposit rates - only so for instant-withdrawal accounts. Exploiting differences across brands of the same bank, we find that banks respond even when surges are not justified by any underlying fundamental factor. Comparing onshore and offshore deposits by the same brand, we show that the absence of deposit insurance and a larger presence of wholesale depositors magnify the destabilising potential of attention. Our results point to a previously undocumented source of bank fragility.

Keywords: Bank runs, deposit insurance, deposit withdrawals, information acquisition

JEL Classification: D81, G01, G21, G28

Suggested Citation

Chavaz, Matthieu and Slutzky, Pablo, Do Banks Worry About Attentive Depositors? Evidence from Multiple-Brand Banks (January 26, 2021). Available at SSRN: https://ssrn.com/abstract=3631051 or http://dx.doi.org/10.2139/ssrn.3631051

Matthieu Chavaz

Independent ( email )

Pablo Slutzky (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
37
Abstract Views
380
PlumX Metrics