Short Selling and Bank Deposit Flows

RePEc Short ID: phe768
ORCID iD: 0000-0002-5088-4460

Carey, Mark S.; Healy, Christopher

doi:10.26509/frbc-wp-202405

Working Paper

Short Selling and Bank Deposit Flows

Abstract: Some observers have argued that the short selling of bank stock contributes to bank runs and bank failures. Previously, no evidence has been available. We find no evidence that more short selling of bank stock is associated with materially larger outflows of bank deposits. We believe this means that proposals to restrict the short selling of bank stock should be supported by other arguments.

Keywords: short-selling; bank runs; bank deposits;

JEL Classification: G21; G12; G01; G18;

https://doi.org/10.26509/frbc-wp-202405