Item Type | Journal paper |
Abstract | We study retail deposit withdrawals from commercial banks that were differentially exposed to distress during the 2007-2009 financial crisis. We show that the propensity of clients to withdraw deposits increases with the severity of bank distress. However, an exclusive pre-crisis bank-client relationship eliminates withdrawal risk. The mechanism through which strong bank-client relationships mitigate withdrawal risk relates to the transaction costs of switching accounts rather than informational rents or differentiated services. Our findings provide empirical support to the Basel III liquidity regulations that emphasize the role of well-established client relationships for the stability of bank funding. |
Authors | Brown, Martin; Morkötter, Stefan & Guin, Benjamin |
Journal or Publication Title | Journal of Financial Stability |
Language | English |
Keywords | Liquidity Risk, Relationship Banking, Market Discipline |
Subjects | business studies economics finance |
HSG Classification | contribution to scientific community |
HSG Profile Area | SOF - System-wide Risk in the Financial System |
Refereed | Yes |
Date | February 2020 |
Publisher | Elsevier |
Volume | Vol. 46 |
Publisher DOI | https://doi.org/10.1016/j.jfs.2019.100707 |
Official URL | https://www.sciencedirect.com/science/article/pii/... |
Contact Email Address | martin.brown@unisg.ch |
Depositing User | Prof. Dr. Martin Brown |
Date Deposited | 04 Nov 2013 12:00 |
Last Modified | 20 Jul 2022 17:18 |
URI: | https://www.alexandria.unisg.ch/publications/227118 |
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CitationBrown, Martin; Morkötter, Stefan & Guin, Benjamin (2020) Deposit Withdrawals from Distressed Banks: Client Relationships Matter. Journal of Financial Stability, Vol. 46 Statisticshttps://www.alexandria.unisg.ch/id/eprint/227118
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