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Close Encounters with Bank Runs

This presentation at the 6th IADI Annual Conference delves into the impact and management of bank runs, drawing insights from past events and exploring implications for the future. From the panic of depositors to the role of liquidity providers, key aspects are analyzed to understand the contagion effect and response mechanisms in financial markets. The session also examines the correlation between run severity and depositor profiles to highlight vulnerabilities and inform better risk mitigation strategies. Attendees will gain valuable perspectives on addressing bank runs through collaboration, insurance schemes, and balancing liquidity adequacy with capital adequacy.

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Close Encounters with Bank Runs

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  1. 6th IADI Annual Conference Close Encounters with Bank Runs Ray B. Dawn Chairman CDIC (Taiwan) Nov. 1, 2007

  2. Contents The Way We Were Apocalypse Now The Day After Tomorrow

  3. The Way We Were

  4. History Has It Source: www.answers.com/topic/bank-run CREATED/PUBLISHED: Cin'ti ; N.Y. : Strobridge Lith. Co., c1895. CREATOR: Strobridge & Co. Lith.

  5. Panic Depositors at a Failed Bank, NYC (1914)

  6. Depositors at a Failed Bank in Taiwan(Jan. 2007) Source: CDIC (Taiwan)

  7. CDIC Staff Tried to Control the Run (Jan, 2007) Source: CDIC (Taiwan)

  8. Piles of Money to be Withdrawn (Jan, 2007) Source: CDIC (Taiwan)

  9. Bank Run: An Inconvenient Truth (1990~2007) Runs

  10. Bank Runs in Taiwan Source: CDIC (Taiwan)

  11. Some Bank Runs Are More Serious Than Others Source: CDIC (Taiwan)

  12. Bank Runs Can Be Contagious Source: CDIC (Taiwan)

  13. People Barely Learnt from History Source: CDIC (Taiwan)

  14. Liquidity Providers to Bank Runs (1990~2007)

  15. How Financial Markets Responded to the Run of One Failed Bank (2007/1/5 as 100)

  16. % % Bank K Bank L D-day D-day D-20 D-15 D-10 D-5 D+5 D+10 D+15 D-20 D-15 D-10 D-5 D+5 D+10 D+15 % % Bank M Bank N D-day D-day D-20 D-15 D-10 D-5 D+5 D+10 D+15 D-20 D-15 D-10 D-5 D+5 D+10 D+15 Paces of Deposit Depletion(2006 & 2007) Note: D-day means the day CDIC took over the FI under the instruction of FSC. Source: CDIC (Taiwan)

  17. Passbook Deposits Took the Hit (2007) Checking Accounts Passbook Deposits Time Deposits

  18. Individuals at the Gate Institutions Individuals

  19. Female Depositors Seemed More Concerned Female Male

  20. The Mid-Age Appeared More Cautious Below 20 20-29 30-39 40-49 50-59 Above 60

  21. Small Depositors Were Prone to Panic Below NTD 1 million Above NTD 1 million

  22. Apocalypse Now

  23. From Main Street to Wall Street

  24. Events Associated with Subprime Chaos

  25. Volatile Stock Markets in 2007(2007/1/2 as 100)

  26. Central Banks to the Rescue (Aug. 9~16) Source: Reuters

  27. Run on a British Bank

  28. Let the Finger-Pointing Begin Source: http://money.cnn.com/galleries/2007/fortune/0709/gallery.subprime_blame.fortune/index.html

  29. The Day After Tomorrow

  30. What’s Next ? • The Roles of DIs and IADI • Cooperation among Safety Net Players Across Borders • Insurance Schemes for Direct Financing? • Liquidity Adequacy vs. Capital Adequacy?

  31. Thank You

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