This paper provides, for the first time, large-scale evidence that liquidity transformation by banks creates fragility, as their uninsured depositors face an incentive to withdraw their money before others (a so-called panic run). Such fragility manifests itself in stronger sensitivity of...

We provide the first large-scale evidence that liquidity transformation by banks creates fragility, as uninsured depositors face an incentive to withdraw money before others (a so-called panic run). Such fragility manifests itself in stronger sensitivity of deposit flows to bank performance. The...

One of the key roles of banks is liquidity transformation, which is also thought to create fragility, as uninsured depositors face an incentive to withdraw money before others (a so-called panic run). Despite large amount of theoretical work, there has not been much empirical evidence...

Many theories link depositors' behavior to the transparency of banks. Yet, very little is known about this relationship empirically. Analyzing US commercial banks from 1994-2013, we document that uninsured deposit flows are more sensitive to information about bank performance when the quality of...

Applying a difference-in-differences approach to explore variations in the timing of bank mergers in the U.S. over the last two decades, we document an increase in borrowers' disclosure when their banks engage in mergers and acquisitions. The effect is stronger among borrowers more reliant on...

Stress tests have become an important component of the supervisory toolkit. However, the extent of disclosure of stress-test results remains controversial. We argue that while stress tests uncover unique information to outsiders – because banks operate in second-best environments with multiple...