Depositor Sentiment
75 Pages Posted: 9 Dec 2015
Date Written: December 7, 2015
Abstract
We use internet search volume data to measure household sentiment and attention for deposit insurance in the U.S. to explain depositor behavior. We find market-level sentiment to cause depositors to withdraw both demand and time deposits from small and medium-sized banks and to run to big banks. By contrast, the attention of households to deposit insurance as revealed by the volume of queries related to the Federal Deposit Insurance Corporation is positively related to changes in deposits. In addition, a higher level of information procurement by households on deposit insurance mitigates the probability of drains in deposits.
Keywords: Bank runs, depositor sentiment, bank deposits, deposit insurance
JEL Classification: G21, D12
Suggested Citation: Suggested Citation