Keep calm and bank on: panic-driven bank runs and the role of public communication

Damiano Sandri, Francesco Grigoli (), Yuriy Gorodnichenko and Olivier Coibion

No 1119, BIS Working Papers from Bank for International Settlements

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.

Keywords: bank runs; public communication; information treatments (search for similar items in EconPapers)
JEL-codes: E21 E58 G21 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-ban and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.bis.org/publ/work1119.pdf Full PDF document (application/pdf)
https://www.bis.org/publ/work1119.htm (text/html)

Related works:
Working Paper: Keep Calm and Bank On: Panic-Driven Bank Runs and the Role of Public Communication (2023)
Working Paper: Keep Calm and Bank On: Panic-Driven Bank Runs and the Role of Public Communication (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1119

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().