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Understanding bank runs: The importance of depositor-bank relationships and networks

Publication ,  Journal Article
Iyer, R; Puri, M
Published in: American Economic Review
June 1, 2012

We use unique depositor-level data for a bank that faced a run to understand the factors that affect depositor behavior. We find uninsured depositors are most likely to run. Deposit insurance helps, but is only partially effective. Bank-depositor relationships mitigate runs, suggesting that relationship with depositors help banks reduce fragility. In addition, we also find that social networks matter. Finally, we find long-term effects of a solvent bank run in that depositors who run do not return back to the bank. Our results help understand the underlying dynamics of bank runs and hold important policy implications.

Duke Scholars

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Published In

American Economic Review

DOI

ISSN

0002-8282

Publication Date

June 1, 2012

Volume

102

Issue

4

Start / End Page

1414 / 1445

Related Subject Headings

  • Economics
  • 38 Economics
  • 35 Commerce, management, tourism and services
  • 15 Commerce, Management, Tourism and Services
  • 14 Economics
 

Citation

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Iyer, R., & Puri, M. (2012). Understanding bank runs: The importance of depositor-bank relationships and networks. American Economic Review, 102(4), 1414–1445. https://doi.org/10.1257/aer.102.4.1414
Iyer, R., and M. Puri. “Understanding bank runs: The importance of depositor-bank relationships and networks.” American Economic Review 102, no. 4 (June 1, 2012): 1414–45. https://doi.org/10.1257/aer.102.4.1414.
Iyer R, Puri M. Understanding bank runs: The importance of depositor-bank relationships and networks. American Economic Review. 2012 Jun 1;102(4):1414–45.
Iyer, R., and M. Puri. “Understanding bank runs: The importance of depositor-bank relationships and networks.” American Economic Review, vol. 102, no. 4, June 2012, pp. 1414–45. Scopus, doi:10.1257/aer.102.4.1414.
Iyer R, Puri M. Understanding bank runs: The importance of depositor-bank relationships and networks. American Economic Review. 2012 Jun 1;102(4):1414–1445.

Published In

American Economic Review

DOI

ISSN

0002-8282

Publication Date

June 1, 2012

Volume

102

Issue

4

Start / End Page

1414 / 1445

Related Subject Headings

  • Economics
  • 38 Economics
  • 35 Commerce, management, tourism and services
  • 15 Commerce, Management, Tourism and Services
  • 14 Economics