![]() ![]() We also investigate how loan growth may affect bank stability. commercial banks over the period 1999Q1–2015Q4, using bank-level data. ![]() Investor sentiment is proxied by two novel but alternative measures based on textual analysis. First, we employ the sentiment measure constructed by García (2013) based on the fraction of positive and negative words in two columns of financial news from the New York Times. Second, we employ the text-based measure of uncertainty constructed by Manela and Moreira (2017) called News Implied Volatility, which uses front-page articles of the Wall Street Journal. The results show that banks’ lending falls when investor sentiment is low, while this effect is more pronounced when banks hold a higher level of credit risk. These effects are more pronounced during recessions with loan growth also responding negatively to the anxiety of investors throughout recessions. Finally, we show that the Great Financial Crisis had a negative effect on investor sentiment leading to a decline in U.S. lending behavior and an increase in the U.S. banking sector instability.Īs failures of banks and other depositary institutions increased in number during the 1980s, economists showed renewed interest in the historical causes of bank failures. Prominent among the explanations that have been presented is that of Charles Calomiris and his colleagues who have argued that the fragmented nature of the U.S. banking system has meant that problems at some banks would be transmitted to other banks through a self-reinforcing process known as a “panic.”1 Eugene White, in his analysis of the banking crisis of the 1930s, has offered an alternative explanation: banks can fail because of the deterioration of their net worth measured as the market value of their assets.2 In this note, we test White's hypothesis as an explanation of bank failures during the Great Depression by correlating the incidence of these failures with measures of bank capital. Our tests should be of interest even to those who hold the bank-panic view, because it is possible that panics caused failures by destroying the value of illiquid bank assets. ![]() The microeconomic foundations of the concept of bank run : a survey. This article is intended to introduce some recent developments on the analysis of bank panics. It shows that banks and depositors face a problem of coordination of their behavior which can be due to informational asymmetries, moral hazard problems, or structural and regulatory caracteristics of the banking System. first part examines runs due to strategic behavior by depositors. The second part studies panics based on depositor's information on the return of bank portfolios. The third part analyses interbank contagion of runs. Les fondements micro-économiques du concept de panique bancaire : une introduction. ![]()
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