Working Paper

Short Selling and Bank Deposit Flows

Abstract: Some observers have argued that the short selling of bank stock contributes to bank runs and bank failures. Previously, no evidence has been available. We find no evidence that more short selling of bank stock is associated with materially larger outflows of bank deposits. We believe this means that proposals to restrict the short selling of bank stock should be supported by other arguments.

Keywords: short-selling; bank runs; bank deposits;

JEL Classification: G21; G12; G01; G18;

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers

Publication Date: 2024-02-08

Number: 24-05