Business models at heart of 2023 banking turmoil – research
Unrealised losses and uninsured deposits were not main drivers of crisis, Chicago Fed paper argues
Poor business models, rather than high levels of unrealised losses and uninsured deposits, were the main reasons behind the failure of US banks in 2023, researchers at the Federal Reserve Bank of Chicago have argued.
Their paper, published this month, claims the standard account of the turmoil does not stand up to scrutiny.
The authors – Steven Kelly and Jonathan Rose – say many other banks with high levels of unrealised losses and uninsured deposits did not suffer runs. They point out that
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