Economics Working Papers

Publication Date

4-20-2018

Number

18007

Abstract

Using a conjoint analysis of 417 finance professionals from six countries, we find no evidence that higher interest rates cause knowledgeable depositors to moderate their withdrawals during a banking crisis. In fact, intended withdrawals are positively correlated with expected interest rate changes. After accounting for endogeneity, this relationship disappears, consistent with the attractiveness of higher returns being offset by increased doubts about bank solvency. The withdrawal decisions of finance professionals are also independent of their personal characteristics, but they appear to place considerable store on deposit insurance generosity and the presence of a formal insurance fund.

JEL Classification

G21, G28

Version History

Original Release Date: April 20, 2018

Departments

Department of Economics, Iowa State University

File Format

application/pdf

Length

35

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