Unintended Consequences of Unemployment Insurance Benefits: The Role of Banks

Arslan, Yavuz ORCID: 0000-0002-7664-3999, Degerli, Ahmet and Kabaş, Gazi (2021) Unintended Consequences of Unemployment Insurance Benefits: The Role of Banks. Finance and Economics Discussion Series, 2021 (026). pp. 1-68.

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Official URL: http://dx.doi.org/10.17016/feds.2021.027

Abstract

<ns3:p>We use disaggregated U.S. data and a border discontinuity design to show that more generous unemployment insurance (UI) policies lower bank deposits. We test several channels that could explain this decline and find evidence consistent with households lowering their precautionary savings. Since deposits are the largest and most stable source of funding for banks, the decrease in deposits affects bank lending. Banks that raise deposits in states with generous UI policies squeeze their small business lending. Furthermore, counties that are served by these banks experience a higher unemployment rate and lower wage growth.</ns3:p>

Item Type:	Article
Uncontrolled Keywords:	Vaccine Related, 8 Decent Work and Economic Growth
Divisions:	Faculty of Humanities and Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	22 Dec 2023 13:32
Last Modified:	15 Mar 2024 18:05
DOI:	10.17016/feds.2021.027
Related URLs:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3177631