Table 3 Open in new tab Predicting bank...

Dependent variable	Failed
ΔInterbank Deposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|			-11.57^**		-11.10^**		-11.79^*	-11.46^**
			(5.51)		(4.84)		(6.19)	(5.45)
ΔDeposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|				-30.00		-25.32	4.24	6.84
				(27.16)		(25.88)	(32.48)	(30.43)
Leverage	0.01	0.17	-0.02	-0.01	0.23	0.18	-0.02	0.23
	(0.12)	(0.18)	(0.12)	(0.12)	(0.18)	(0.18)	(0.11)	(0.18)
2nd Size quartile	11.04	-2.41	8.35	9.40	-3.58	-3.56	8.52	-3.31
	(8.65)	(9.50)	(8.26)	(8.83)	(8.90)	(9.71)	(8.17)	(8.90)
3rd Size quartile	-1.36	-12.37	0.41	-0.05	-9.49	-11.14	0.26	-9.73
	(6.75)	(8.67)	(6.86)	(6.63)	(8.07)	(8.49)	(6.84)	(8.06)
4th Size quartile	-4.90	-6.03	-0.31	-3.46	-1.04	-5.00	-0.43	-1.15
	(6.57)	(8.61)	(6.33)	(6.37)	(8.34)	(8.60)	(6.17)	(8.31)
Foreign Funding	0.95	-2.48	-7.34	-3.02	-10.55^*	-5.61	-6.94	-9.96
	(3.52)	(4.94)	(5.34)	(3.89)	(6.34)	(5.36)	(4.71)	(6.02)
Liquidity	6.14	-15.30	1.69	0.43	-16.78	-19.58	2.41	-15.67
	(11.57)	(11.08)	(10.68)	(13.09)	(11.01)	(12.55)	(13.25)	(13.10)
Interbank	4.38	22.72	2.22	2.02	23.02	20.28	2.52	23.69
	(8.80)	(19.02)	(9.06)	(8.19)	(19.11)	(18.43)	(8.33)	(18.70)
Nordwolle Connection	17.61	20.13	19.06	15.02	19.64	17.68	19.46	20.29
	(15.32)	(16.93)	(15.31)	(13.88)	(16.20)	(15.38)	(14.78)	(15.73)
Number of Banks	118	118	118	118	118	118	118	118
Bank-Type FE	No	Yes	No	No	Yes	Yes	No	Yes
R²	.073	.17	.15	.083	.24	.17	.15	.24
main AUC	0.582	0.810	0.723	0.614	0.826	0.812	0.721	0.822

Dependent variable

Failed

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

ΔInterbank Deposits|$_{\text{April} \,31 \colon \text{July} \,31} $|

-11.57^**

-11.10^**

-11.79^*

-11.46^**

(5.51)

(4.84)

(6.19)

(5.45)

ΔDeposits|$_{\text{April} \,31 \colon \text{July} \,31} $|

-30.00

-25.32

4.24

6.84

(27.16)

(25.88)

(32.48)

(30.43)

Leverage

0.01

0.17

-0.02

-0.01

0.23

0.18

-0.02

0.23

(0.12)

(0.18)

(0.12)

(0.18)

(0.11)

(0.18)

2nd Size quartile

11.04

-2.41

8.35

9.40

-3.58

-3.56

8.52

-3.31

(8.65)

(9.50)

(8.26)

(8.83)

(8.90)

(9.71)

(8.17)

(8.90)

3rd Size quartile

-1.36

-12.37

0.41

-0.05

-9.49

-11.14

0.26

-9.73

(6.75)

(8.67)

(6.86)

(6.63)

(8.07)

(8.49)

(6.84)

(8.06)

4th Size quartile

-4.90

-6.03

-0.31

-3.46

-1.04

-5.00

-0.43

-1.15

(6.57)

(8.61)

(6.33)

(6.37)

(8.34)

(8.60)

(6.17)

(8.31)

Foreign Funding

0.95

-2.48

-7.34

-3.02

-10.55^*

-5.61

-6.94

-9.96

(3.52)

(4.94)

(5.34)

(3.89)

(6.34)

(5.36)

(4.71)

(6.02)

Liquidity

6.14

-15.30

1.69

0.43

-16.78

-19.58

2.41

-15.67

(11.57)

(11.08)

(10.68)

(13.09)

(11.01)

(12.55)

(13.25)

(13.10)

Interbank

4.38

22.72

2.22

2.02

23.02

20.28

2.52

23.69

(8.80)

(19.02)

(9.06)

(8.19)

(19.11)

(18.43)

(8.33)

(18.70)

Nordwolle Connection

17.61

20.13

19.06

15.02

19.64

17.68

19.46

20.29

(15.32)

(16.93)

(15.31)

(13.88)

(16.20)

(15.38)

(14.78)

(15.73)

Number of Banks

118

Bank-Type FE

Yes

R²

.073

.17

.15

.083

.24

.17

.15

.24

main AUC

0.582

0.810

0.723

0.614

0.826

0.812

0.721

0.822

Dependent variable	Failed
ΔInterbank Deposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|			-11.57^**		-11.10^**		-11.79^*	-11.46^**
			(5.51)		(4.84)		(6.19)	(5.45)
ΔDeposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|				-30.00		-25.32	4.24	6.84
				(27.16)		(25.88)	(32.48)	(30.43)
Leverage	0.01	0.17	-0.02	-0.01	0.23	0.18	-0.02	0.23
	(0.12)	(0.18)	(0.12)	(0.12)	(0.18)	(0.18)	(0.11)	(0.18)
2nd Size quartile	11.04	-2.41	8.35	9.40	-3.58	-3.56	8.52	-3.31
	(8.65)	(9.50)	(8.26)	(8.83)	(8.90)	(9.71)	(8.17)	(8.90)
3rd Size quartile	-1.36	-12.37	0.41	-0.05	-9.49	-11.14	0.26	-9.73
	(6.75)	(8.67)	(6.86)	(6.63)	(8.07)	(8.49)	(6.84)	(8.06)
4th Size quartile	-4.90	-6.03	-0.31	-3.46	-1.04	-5.00	-0.43	-1.15
	(6.57)	(8.61)	(6.33)	(6.37)	(8.34)	(8.60)	(6.17)	(8.31)
Foreign Funding	0.95	-2.48	-7.34	-3.02	-10.55^*	-5.61	-6.94	-9.96
	(3.52)	(4.94)	(5.34)	(3.89)	(6.34)	(5.36)	(4.71)	(6.02)
Liquidity	6.14	-15.30	1.69	0.43	-16.78	-19.58	2.41	-15.67
	(11.57)	(11.08)	(10.68)	(13.09)	(11.01)	(12.55)	(13.25)	(13.10)
Interbank	4.38	22.72	2.22	2.02	23.02	20.28	2.52	23.69
	(8.80)	(19.02)	(9.06)	(8.19)	(19.11)	(18.43)	(8.33)	(18.70)
Nordwolle Connection	17.61	20.13	19.06	15.02	19.64	17.68	19.46	20.29
	(15.32)	(16.93)	(15.31)	(13.88)	(16.20)	(15.38)	(14.78)	(15.73)
Number of Banks	118	118	118	118	118	118	118	118
Bank-Type FE	No	Yes	No	No	Yes	Yes	No	Yes
R²	.073	.17	.15	.083	.24	.17	.15	.24
main AUC	0.582	0.810	0.723	0.614	0.826	0.812	0.721	0.822

Table 3

Open in new tab

Predicting bank failure with and without deposit flows.

Dependent variable	Failed
Dependent variable	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
ΔInterbank Deposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|			-11.57^**		-11.10^**		-11.79^*	-11.46^**
			(5.51)		(4.84)		(6.19)	(5.45)
ΔDeposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|				-30.00		-25.32	4.24	6.84
				(27.16)		(25.88)	(32.48)	(30.43)
Leverage	0.01	0.17	-0.02	-0.01	0.23	0.18	-0.02	0.23
	(0.12)	(0.18)	(0.12)	(0.12)	(0.18)	(0.18)	(0.11)	(0.18)
2nd Size quartile	11.04	-2.41	8.35	9.40	-3.58	-3.56	8.52	-3.31
	(8.65)	(9.50)	(8.26)	(8.83)	(8.90)	(9.71)	(8.17)	(8.90)
3rd Size quartile	-1.36	-12.37	0.41	-0.05	-9.49	-11.14	0.26	-9.73
	(6.75)	(8.67)	(6.86)	(6.63)	(8.07)	(8.49)	(6.84)	(8.06)
4th Size quartile	-4.90	-6.03	-0.31	-3.46	-1.04	-5.00	-0.43	-1.15
	(6.57)	(8.61)	(6.33)	(6.37)	(8.34)	(8.60)	(6.17)	(8.31)
Foreign Funding	0.95	-2.48	-7.34	-3.02	-10.55^*	-5.61	-6.94	-9.96
	(3.52)	(4.94)	(5.34)	(3.89)	(6.34)	(5.36)	(4.71)	(6.02)
Liquidity	6.14	-15.30	1.69	0.43	-16.78	-19.58	2.41	-15.67
	(11.57)	(11.08)	(10.68)	(13.09)	(11.01)	(12.55)	(13.25)	(13.10)
Interbank	4.38	22.72	2.22	2.02	23.02	20.28	2.52	23.69
	(8.80)	(19.02)	(9.06)	(8.19)	(19.11)	(18.43)	(8.33)	(18.70)
Nordwolle Connection	17.61	20.13	19.06	15.02	19.64	17.68	19.46	20.29
	(15.32)	(16.93)	(15.31)	(13.88)	(16.20)	(15.38)	(14.78)	(15.73)
Number of Banks	118	118	118	118	118	118	118	118
Bank-Type FE	No	Yes	No	No	Yes	Yes	No	Yes
R²	.073	.17	.15	.083	.24	.17	.15	.24
main AUC	0.582	0.810	0.723	0.614	0.826	0.812	0.721	0.822

Dependent variable	Failed
Dependent variable	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
ΔInterbank Deposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|			-11.57^**		-11.10^**		-11.79^*	-11.46^**
			(5.51)		(4.84)		(6.19)	(5.45)
ΔDeposits\|$_{\text{April} \,31 \colon \text{July} \,31} $\|				-30.00		-25.32	4.24	6.84
				(27.16)		(25.88)	(32.48)	(30.43)
Leverage	0.01	0.17	-0.02	-0.01	0.23	0.18	-0.02	0.23
	(0.12)	(0.18)	(0.12)	(0.12)	(0.18)	(0.18)	(0.11)	(0.18)
2nd Size quartile	11.04	-2.41	8.35	9.40	-3.58	-3.56	8.52	-3.31
	(8.65)	(9.50)	(8.26)	(8.83)	(8.90)	(9.71)	(8.17)	(8.90)
3rd Size quartile	-1.36	-12.37	0.41	-0.05	-9.49	-11.14	0.26	-9.73
	(6.75)	(8.67)	(6.86)	(6.63)	(8.07)	(8.49)	(6.84)	(8.06)
4th Size quartile	-4.90	-6.03	-0.31	-3.46	-1.04	-5.00	-0.43	-1.15
	(6.57)	(8.61)	(6.33)	(6.37)	(8.34)	(8.60)	(6.17)	(8.31)
Foreign Funding	0.95	-2.48	-7.34	-3.02	-10.55^*	-5.61	-6.94	-9.96
	(3.52)	(4.94)	(5.34)	(3.89)	(6.34)	(5.36)	(4.71)	(6.02)
Liquidity	6.14	-15.30	1.69	0.43	-16.78	-19.58	2.41	-15.67
	(11.57)	(11.08)	(10.68)	(13.09)	(11.01)	(12.55)	(13.25)	(13.10)
Interbank	4.38	22.72	2.22	2.02	23.02	20.28	2.52	23.69
	(8.80)	(19.02)	(9.06)	(8.19)	(19.11)	(18.43)	(8.33)	(18.70)
Nordwolle Connection	17.61	20.13	19.06	15.02	19.64	17.68	19.46	20.29
	(15.32)	(16.93)	(15.31)	(13.88)	(16.20)	(15.38)	(14.78)	(15.73)
Number of Banks	118	118	118	118	118	118	118	118
Bank-Type FE	No	Yes	No	No	Yes	Yes	No	Yes
R²	.073	.17	.15	.083	.24	.17	.15	.24
main AUC	0.582	0.810	0.723	0.614	0.826	0.812	0.721	0.822

This table reports result from estimating a regression of the following form:

$$\displaystyle \begin{array}{c} \text{Failed}_{b} = \gamma_{\theta} + \beta_{1} \times X_{b} + \beta_{2} \times \Delta \text{Interbank} \,\text{Deposits}_{\text{April} \,31 \colon \text{July} \,31} \\ + \beta_{3} \times \Delta ~ \text{Deposits}_{\text{April} \,31 \colon \text{July} \,31} + \epsilon_{b},\end{array} $$

where |$ \text{Failed}_{b} $| is, as before, a dummy that indicates whether bank b failed during or after the run. Our variables of interest are the changes in interbank deposits between April and July of 1931 as well as the changes in total deposit funding over the same period. |$ \gamma_{\theta} $| is a set of bank-type fixed effects and X_b is a set of bank-level characteristics in which we include a bank’s ratio of total liabilities (total assets net of equity) to equity, liquid assets (securities and interbank claims) to total deposits, interbank funding to total deposits, indicators of the size quartile based on total assets, an indicator for use of foreign-currency denominated deposits, and an indicator for whether a bank was connected to the nonfinancial firm “Nordwolle” that declared bankruptcy in June 1931. All control variables are calculated by averaging at the bank level from February through April 1931. Standard errors are in parentheses; *, **, and *** indicate significance at the 10%, 5%, and 1% level, respectively. The final row reports the area under receiver operating characteristics curve (AUC).

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