Old-Fashioned Deposit Runs

Abstract

This paper characterizes the deposit runs that occurred in the commercial banking system during 2008 and compares them with deposit runs during the 1930s. The importance of withdrawals by large depositors is a strong source of continuity across the two eras and reflects the longstanding concentration of deposit holdings. Runs occurred in 2008 despite the presence of national deposit insurance, which does not fully cover large accounts and therefore has limited impact on the incentives of those account holders. Large depositors continue to represent a source of both market discipline and financial instability.