Flight to Safety in the Regional Bank Stress of 2023
56 Pages Posted: 25 May 2023 Last revised: 25 Feb 2025
Date Written: February 25, 2025
Abstract
Using confidential data on deposits at U.S. banks, we document a flight to safety by depositors to large banks in early 2023. In weeks of heightened stress, large banks experienced faster deposit growth than small and regional banks without raising deposit rates. Large banks’ deposit growth rates exceeded other banks’ even after accounting for characteristics associated with failures, including uninsured deposit funding and unrealized mark-to-market losses. Monthly data show that uninsured deposits rose faster at GSIBs relative to large non-GSIBs, but insured deposits grew slower. While retail and small business depositors also flew to safety, nonfinancial
corporations reacted more strongly.
corporations reacted more strongly.
Keywords: Bank deposits, bank runs, bank failures, interest rates, flight to safety
JEL Classification: G21, G28, G01
Suggested Citation: Suggested Citation
Caglio, Cecilia and Dlugosz, Jennifer and Rezende, Marcelo, Flight to Safety in the Regional Bank Stress of 2023 (February 25, 2025). Available at SSRN: https://ssrn.com/abstract=4457140 or http://dx.doi.org/10.2139/ssrn.4457140
Do you have a job opening that you would like to promote on SSRN?
Feedback
Feedback to SSRN