New Perspectives on Banking and Credit
Paper Session
Monday, Jan. 5, 2026 1:00 PM - 3:00 PM (EST)
- Daniel Carvalho, Indiana University
The Dynamics of Deposit Flightiness and its Impact on Financial Stability
Abstract
We find that the flightiness of depositors displays pronounced fluctuations over time, reaching unprecedentedly high levels after the Covid-19 crisis. Elevated deposit flightiness coincides with expansions in central bank reserves and low interest rate environments. We rationalize these trends based on heterogeneity in investors’ convenience value for deposits. In our model, investors in the banking system value the convenience benefits of deposits more than those that choose to invest in non-banks. Following deposit inflows from outside investors, e.g., due to QE’s reserve expansions, the marginal depositor in the banking system becomes more rate-sensitive and the risk of panic runs increases. Our findings imply that the risk of panic runs triggered by policy rate hikes is amplified when the Fed’s balance sheet size is larger, highlighting a novel linkage between conventional and unconventional monetary policy.Fragile Financing? How Corporate Reliance on Shadow Banking Affects their Access to Bank Liquidity
Abstract
Greater reliance on nonbank financing makes firms fragile as it leads banks to limit their access to credit lines. Besides demonstrating this result in panel tests subject to range of controls and robustness checks, we employ the 2014–16 oil-price collapse as an exogenous rollover risk in nonbank financing of non-oil-sector firms by collateralized loan obligations (CLOs) exposed to the oil sector. Nonbank-reliant firms with looming maturities or higher credit risk face reductions and wider spreads in bank credit lines after the shock, resulting in weaker financial and real performance in spite of their drawdowns of existing credit lines.Security Losses, Interbank Markets, and Monetary Policy Transmission: Evidence from the Eurozone
Abstract
Banks that experienced larger losses in their pledgeable securities portfolios following the July 2022 monetary policy tightening became less able to borrow through the interbank market and subsequently reduced their corporate lending, regardless of whether the securities were booked at market or historical value. These effects were less pronounced for banks with abundant collateral and for domestic subsidiaries of banking groups, which received liquidity through their group's internal capital market. Our results highlight a collateral channel in the bank-based transmission of monetary policy and show how differences in banking structure can contribute to an uneven transmission of monetary policy.Discussant(s)
Adriano Rampini
,
Duke University
Itay Goldstein
,
University of Pennsylvania
Olivier Darmouni
,
Columbia University
Matteo Crosignani
,
Federal Reserve Bank of New York
JEL Classifications
- G2 - Financial Institutions and Services