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Short Selling and Bank Deposit Flows

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Abstract

Some observers have argued that the short selling of bank stock contributes to bank runs and bank failures. Previously, no evidence has been available. We find no evidence that more short selling of bank stock is associated with materially larger outflows of bank deposits. We believe this means that proposals to restrict the short selling of bank stock should be supported by other arguments.

Suggested Citation

  • Mark S. Carey & Christopher Healy, 2024. "Short Selling and Bank Deposit Flows," Working Papers 24-05, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwq:97870
    DOI: 10.26509/frbc-wp-202405
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    References listed on IDEAS

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    1. Alessandro Beber & Daniela Fabbri & Marco Pagano & Saverio Simonelli, 2021. "Short-Selling Bans and Bank Stability," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 10(1), pages 158-187.
    2. Beneish, M.D. & Lee, C.M.C. & Nichols, D.C., 2015. "In short supply: Short-sellers and stock returns," Journal of Accounting and Economics, Elsevier, vol. 60(2), pages 33-57.
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    More about this item

    Keywords

    short-selling; bank runs; bank deposits;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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