Yevhenii Usenko

I study how pricing and flows of large and small deposits respond to monetary policy. Using novel hand-collected data on posted deposit rate schedules at major U.S. banks and comprehensive regulatory data, I document that banks tier rates by deposit balance, paying higher and more policy-sensitive rates on larger balances. On average, rate pass-through for large deposits is more than double that for small deposits (0.7 versus 0.3), and the share of large deposits alone explains 15% of variation in deposit betas across banks. Despite this better pricing, large deposits flow out more strongly following monetary policy tightening and account for essentially all of the total deposit response. Risk does not explain these patterns. My results suggest that the deposits channel of monetary policy operates disproportionately through a small number of large, responsive depositors who account for a substantial share of bank funding.

We study the mechanisms driving bank losses across historical banking crises in 46 economies and the effectiveness of policy interventions in restoring bank capitalization. We find that bank stocks experience large, permanent declines at the onset of crises. These losses predict commensurate long-term declines in banks' earnings and dividends, rather than elevated future equity returns. Bank losses are primarily driven by write-downs of nonperforming assets, not asset sales during panics. Forceful liquidity-based interventions during crises predict only small, temporary increases in bank market value. Overall, these results suggest that bank losses during crises are not primarily due to temporary price dislocations. Early liquidity interventions can avert banking crises, but only under specific conditions. Once large bank equity declines have occurred, policy responses have historically failed to prevent persistent undercapitalization in the banking sector.