News coverage drove 2023 US bank runs – NY Fed study
Equity investors only became attuned to lenders’ weak fundamentals after mass panic began
The behaviour of stock market investors during the 2023 bank runs in the US were driven as much by news coverage as by the lenders’ balance sheet positions, researchers at the Federal Reserve Bank of New York have found.
In a blog post on September 30, the authors – Natalia Fischl-Lanzoni, Martin Hiti and Asani Sarkar – point out that vulnerabilities associated with distressed banks in the 2023 crisis, such as high levels of uninsured deposits and unrealised losses, were already visible in 2022.
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