FRIC/Finance Seminar with Shohini Kundu, UCLA Anderson School of Management
The Department of Finance is proud to announce the upcoming seminar with Shohini Kundu, UCLA Anderson School of Management.
Shohini Kundu will present:
The Geography of Bank Deposits and the Origins of Aggregate Fluctuations
ABSTRACT: This paper presents a new mechanism through which the geography of bank deposits increases financial fragility. We document a new fact about the within-bank geographic concentration of deposits -- 30% of bank deposits are concentrated in a single county. Hence, bank deposits are geographically concentrated. We hypothesize that large shocks to these concentrated areas can amplify through bank internal capital markets and generate aggregate fluctuations. We combine the within-bank geographic concentration of deposits with local natural disaster-induced property damages to construct novel bank deposit shocks. On aggregate, the bank deposit shocks can explain 3.30% of variation in economic growth. Specifically, local disaster shocks result in aggregate fluctuations through their effect on deposits, which negatively affect bank liquidity creation. Financial frictions such as regulatory constraints, informational advantages, and borrower constraints are critical for the aggregation of local shocks.
Solbjerg Plads 3
More information will follow.