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Monetary Policy, Held-to-Maturity Securities, and Uninsured Deposit Withdrawals

Author

Listed:
  • H. Özlem Dursun-de Neef
  • Steven Ongena
  • Alexander Schandlbauer

Abstract

This paper shows that an increase in the Federal funds rate is associated with an increase in banks' unrealized losses due to their held-to-maturity (HTM) portfolio. This increase exposes banks to large uninsured deposit withdrawals as depositors seek a flight to safety. This relationship is present mainly for banks with investment portfolio losses and those with a lower capital ratio. Our results highlight the importance of banks' HTM securities when a maturity mismatch exposes them to losses and deposit withdrawals after interest rates begin to rise.

Suggested Citation

  • H. Özlem Dursun-de Neef & Steven Ongena & Alexander Schandlbauer, 2026. "Monetary Policy, Held-to-Maturity Securities, and Uninsured Deposit Withdrawals," European Accounting Review, Taylor & Francis Journals, vol. 35(2), pages 503-528, March.
    • Handle: RePEc:taf:euract:v:35:y:2026:i:2:p:503-528
    DOI: 10.1080/09638180.2025.2478164
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