Depositors Disciplining Banks: The Impact of Scandals

Job Market Paper

Do depositors react to negative non-financial information about their banks? By using branch level data for the U.S., I show that banks, that financed the highly controversial Dakota Access Pipeline, experienced significant decreases in deposit growth, especially in branches located closest to the pipeline. These effects were greater for branches located in environmentally or socially conscious counties and data suggests that savings banks were among the main beneficiaries of this depositor movement. Using a global hand-collected dataset on tax evasion, corruption and environmental scandals related to banks, I show that negative deposit growth as a reaction to scandals is a more widespread phenomenon.

Media – 1) Financial Times 2) Chicago Booth ProMarket 3) VoxEU 4) Tax Justice Network 5) BankTrack 6) BankTrack Newsletter 7) S&P Global 8) 20Min

Videos – 1) Federal Reserve Bank of St. Louis  2) European Commission

Paper – 1) Stigler Center Working Paper Series 2) SSRN

Conference and Seminar Presentations – 2019 ASSA, European Commission Conference on Promoting Sustainable Finance (Belgium), 2019 Chicago Financial Institutions Conference (US), Southwestern Finance Association 2019 Conference (US), Chicago Booth Economics of Social Sector Organizations Conference (US), SAFE conference on Sustainable Architecture for Finance (Germany), Geneva Summit on Sustainable Finance (Switzerland), The Federal Reserve’s sixth annual Community Banking in the 21st Century research and policy conference (US), PRI Academic Network Conference (US), Inaugural Conference, Global Research Alliance for Sustainable Finance and Investment (the Netherlands), Chicago Booth Stigler Center Political Economy of Finance 2018 (US), 2019 AFA Atlanta Poster Session (US), 25th Global Finance Conference (France), European Financial Management Association 2018 Annual Meeting (Italy), 5th Sussex Young Finance Scholars Conference (UK), Cass Research Days (UK), 6th International Symposium on Environment & Energy  Finance Issues  (France), the 35th Annual Conference of the French Finance Association  (France), ETHOS (UK), the Wharton School (US), MIDAs (US), Cass Business School (UK) and Tilburg University (the Netherlands)