Two Centuries of Systemic Bank Runs

Abstract

Bank runs are a central concern for financial stability, yet empirical evidence on their incidence and macroeconomic aftermath remains scarce. We construct a novel database of bank runs covering 192 countries since 1800, combining narrative evidence from 667 sources with statistical indicators of aggregate deposit contractions. Systemic runs—those accompanied by country-level deposit outflows—are followed by output losses of around 9% over five years, far larger than those following non-systemic runs or deposit contractions outside of runs. The output costs of systemic runs are more severe when a fundamental cause is present, yet runs remain costly even when they are panic-driven rather than due to deteriorating fundamentals. Deposit insurance and the presence of a central bank are associated with a lower probability of runs turning systemic, and liquidity support and liability guarantees with smaller output losses. Our findings suggest that both fundamentals and disruptions to bank liabilities shape the downturns that accompany bank runs.

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.