Template-Type: ReDIF-Paper 1.0
Author-Name: Damiano Sandri
Author-X-Name-First: Damiano
Author-X-Name-Last: Sandri
Author-Name: Francesco Grigoli
Author-X-Name-First: Francesco
Author-X-Name-Last: Grigoli
Author-Name: Yuriy Gorodnichenko
Author-X-Name-First: Yuriy
Author-X-Name-Last: Gorodnichenko
Author-Name: Olivier Coibion
Author-X-Name-First: Olivier
Author-X-Name-Last: Coibion
Title: Keep calm and bank on: panic-driven bank runs and the role of public communication
Abstract: Using a survey with information treatments conducted in the aftermath of SVB's collapse, we study households' perspectives on bank stability, the potential for panic-driven bank runs, and the role of public communication. When informed about SVB's collapse, households become more likely to withdraw deposits, due to both a higher perceived risk of bank failure and higher expected losses on deposits in case of bank failure. Leveraging hypothetical questions and the exogenous variation in beliefs generated by the information treatments, we show that households reallocate deposit withdrawals primarily into other banks and cash, with little passthrough into spending. Information about FDIC insurance and communication about bank stability by the Federal Reserve can reassure depositors, while communication from political leaders only influences their electoral base.
Creation-Date: 2023-08
File-URL: https://www.bis.org/publ/work1119.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1119.htm
File-Format: text/html
Number: 1119
Keywords: bank runs, public communication, information treatments
Classification-JEL: E21, E58, G21
Handle: RePEc:bis:biswps:1119