NEW YORK, July 7 (Reuters) – Bank runs turn into bigger problems when financial institutions’ broader \u200cunderlying health is under challenge, new research from \u200cthe New York Federal Reserve showed on Tuesday. <\/p>\n
Data offer “little support” for \u200bthe idea that small shocks can generate “widespread” banking panics, New York Fed researchers wrote in a blog posting. <\/p>\n
“Poor bank fundamentals are necessary for bank runs to \u200ctranslate into failure \u2060and for bank distress to generate severe economic distress,” the research said, adding that “although \u2060runs can occur in both weak and strong banks, poor fundamentals are necessary for runs to result in \u200bbank failures.” <\/p>\n
The \u200bresearchers noted that their \u200bfindings are based on \u200ca new database powered by artificial intelligence. “We use large language models … to extract information on bank runs from millions of digitized historical newspaper pages, creating the most comprehensive database of bank runs in U.S. \u200chistory,” they said. <\/p>\n
The blog noted the \u200bimportance of properly understanding bank \u200bruns, where declining \u200bconfidence in an institution drives depositors \u200cto try to recover their \u200bdeposits en masse. “Runs \u200bshould thus be seen as a trigger for bank failures and crises, but insolvent banks are \u200bnecessary for \u200cthis trigger to devastate the banking system and \u200bthe economy,” they wrote. <\/p>\n
(Reporting by Michael S. Derby; \u200bEditing by Paul Simao) <\/p>\n","protected":false},"excerpt":{"rendered":"NEW YORK, July 7 (Reuters) – Bank runs turn into bigger problems when financial institutions’ broader \u200cunderlying health…\n","protected":false},"author":2,"featured_media":289156,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[110500,110501,97888,9,33691,11,10,3730],"class_list":["post-289155","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-york","tag-bank-failures","tag-bank-runs","tag-financial-institutions","tag-new-york","tag-new-york-federal-reserve","tag-new-york-headlines","tag-new-york-news","tag-research"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/289155","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=289155"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/289155\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/289156"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=289155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=289155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=289155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}