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Author/Editor:
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Maechler, Andrea M. ; McDill, Kathleen
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Publication Date:
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November 01, 2003
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Electronic Access:
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Free Full text
(PDF file size is 338KB).
Use the free
Adobe Acrobat Reader
to view this PDF file
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper investigates the presence of depositor discipline in the U.S. banking sector. We test whether depositors penalize (discipline) banks for poor performance by withdrawing their uninsured deposits. While focusing on the movements in uninsured deposits, we also account for the possibility that banks may be forced to pay a risk premium in the form of higher interest rates to induce depositors not to withdraw their uninsured deposits. Our results support the existence of depositor discipline: a weak bank may not necessarily be able to stop a deposit drain by raising its uninsured deposit interest rates.
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Series:
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Working Paper No. 03/226
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Subject(s):
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Deposit insurance | United States | Banking systems | Markets
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Author's Keyword(s):
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Deposit Insurance | Market Discipline | Banking System |
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