IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/34128.html
   My bibliography  Save this paper

The Dynamics of Deposit Flightiness and its Impact on Financial Stability

Author

Listed:
  • Kristian Blickle
  • Jian Li
  • Xu Lu
  • Yiming Ma

Abstract

We document that deposit flightiness varies significantly over time, peaking after Covid-19. Elevated deposit flightiness coincides with QE and low interest rates. We rationalize these trends based on heterogeneity in investors’ convenience value. Investors in the banking system value the convenience benefits of deposits more than outside investors. Following deposit inflows, e.g., due to QE's reserve expansions, the marginal depositor in the banking system becomes less convenience seeking and the risk of panic runs increases. As a result, policy rate hikes are more destabilizing when preceded by QE. Our findings reveal a novel linkage between conventional and unconventional monetary policy.

Suggested Citation

  • Kristian Blickle & Jian Li & Xu Lu & Yiming Ma, 2025. "The Dynamics of Deposit Flightiness and its Impact on Financial Stability," NBER Working Papers 34128, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34128
    Note: AP CF ME
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w34128.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:34128. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.