The Distortive Effects of Too Big To Fail: Evidence from the Danish Market for Retail Deposits
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The Distortive Effects of Too Big To Fail : Evidence from the Danish Market for Retail Deposits. / Iyer, Rajkamal; Jensen, Thais Lærkholm; Johannesen, Niels; Sheridan, Adam Francis McSorley.
I: The Review of Financial Studies, Bind 32, Nr. 12, 15.03.2019, s. 4653–4695.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - The Distortive Effects of Too Big To Fail
T2 - Evidence from the Danish Market for Retail Deposits
AU - Iyer, Rajkamal
AU - Jensen, Thais Lærkholm
AU - Johannesen, Niels
AU - Sheridan, Adam Francis McSorley
PY - 2019/3/15
Y1 - 2019/3/15
N2 - We study the impact of too-big-to-fail (TBTF) guarantees on the market for retail deposits. Exploiting information about all personal deposit accounts in Denmark and salient changes to the deposit insurance limit, we provide evidence that systemically important banks successfully retain and attract uninsured deposits in a crisis at the expense of other banks even as they differentially lower their interest rates. The funding shock suffered by nonsystemic banks causes a decrease in their lending. The results point to the distortive effects of TBTF guarantees in the market for retail deposits.
AB - We study the impact of too-big-to-fail (TBTF) guarantees on the market for retail deposits. Exploiting information about all personal deposit accounts in Denmark and salient changes to the deposit insurance limit, we provide evidence that systemically important banks successfully retain and attract uninsured deposits in a crisis at the expense of other banks even as they differentially lower their interest rates. The funding shock suffered by nonsystemic banks causes a decrease in their lending. The results point to the distortive effects of TBTF guarantees in the market for retail deposits.
U2 - 10.1093/rfs/hhz037
DO - 10.1093/rfs/hhz037
M3 - Journal article
VL - 32
SP - 4653
EP - 4695
JO - The Review of Financial Studies
JF - The Review of Financial Studies
SN - 0893-9454
IS - 12
ER -
ID: 215920800