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Pré-Publication, Document De Travail Année : 2023

From the Saving Glut to Financial Instability

Résumé

I show that the saving glut spurs banking instability. In the US, banks locally exposed to its root causes -- higher savings by intangible-intensive firms and the rise in household wealth inequality -- massively increased deposits since 2000, leading to an unprecedented deposit-to-GDP ratio and to a surge in uninsured deposits. To causally identify an impact of this ``deposit glut'' on financial instability, I use the unexpected failure of Silicon Valley Bank in March 2023 as a quasi-natural experiment: other US banks with high local exposure to either intangible-intensive firms or wealth inequality experienced significantly larger drops in market valuation.
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hal-04414073 , version 1 (24-01-2024)

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Guillaume Vuillemey. From the Saving Glut to Financial Instability: Evidence from the Silicon Valley Bank Failure. 2023. ⟨hal-04414073⟩

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