In the Banking Acts of 1933 and 1935, the United States created the Federal Deposit Insurance Corporation, which ensured deposits in commercial banks up to $5,000. Congress capped the size of insured deposits so that small depositors would not run on banks, but large and informed depositors –...

Using unique data on over-the-counter bank stock prices and balance sheet information we explore bank funding cost differentials using the risk-adjusted return gap between the largest and the smallest depository institutions. We find that the largest commercial bank stocks, ranked by market...