Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/113081
Authors: 
Guin, Benjamin
Brown, Martin
Morkötter, Stefan
Year of Publication: 
2015
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Credit and Liquidity Risks in Financially Integrated Markets: Policy Implications and Real Effects A02-V1
Abstract: 
We study retail deposit withdrawals from European commercial banks which incurred investment losses in the wake of the U.S. subprime crisis. We document a strong propensity of households to withdraw deposits from distressed banks, especially when a bank receives a public bailout. However, the withdrawal risk for a distressed bank is mitigated by strong bank-client relationships and household-level switching costs: Households which rely on a single deposit account, which do not live close to a non-distressed bank, or which maintain a credit relationship with a distressed bank are significantly less likely to withdraw deposits. Our findings provide empirical support to the Basel III liquidity regulations which emphasize the role of well-established client relationships for the stability of bank funding.
JEL: 
D14
G21
G28
Document Type: 
Conference Paper

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