A Tale of Two Runs: Depositor Responses to Bank Solvency Risk

We examine heterogeneity in depositor responses to solvency risk using depositor-level data for a bank that faced two different runs. We find that depositors with loans and bank staff are, in a low solvency risk shock, less likely than others to run, but, in a high solvency risk shock, more likely to run. Uninsured depositors are also sensitive to bank solvency. In contrast, depositors with older accounts run less, and those with frequent past transactions run more, irrespective of the underlying risk. Our results show how the fragility of a bank depends on the composition of its deposit base.