1st Workshop on Financial Intermediation

Abstract

We study the incidence and macroeconomic consequences of wholesale funding crises using a novel narrative chronology and newly constructed data on banks liability structures for 147 countries from 1800 to 2024. Wholesale crises have occurred with unprecedented frequency over the past three decades and have become more common than retail bank runs, especially in advanced economies. We show that wholesale crises are predictable using observable fundamentals such as non-deposit funding growth and bank capital ratios. The macroeconomic fallout from wholesale funding crises is severe when accompanied by contractions in non-deposit funding, and can exceed the costs of retail deposit runs, consistent with wholesale creditors possessing superior information about bank solvency. While deposit insurance reduces the likelihood of retail bank runs, it increases the probability of wholesale funding crises, indicating that run risk is reallocated from insured retail depositors to uninsured wholesale creditors.

Tobias König

Post-Doctoral Researcher in Economics

I am a postdoctoral researcher at the Institute of Finance and Statistics at the economics department of the University of Bonn and the Collaborative Research Center (CRC) TR 224.