The evolution of banking in the 21st century

March 27, 2024, Paper: "Uninsured deposits should be subjected to tougher regulatory requirements to guard against the type of rapid runs that toppled three large regional banks last spring, suggests a paper to be discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 29. In the wake of the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank (three of the four largest bank failures in U.S. history), the authors look at two trends over the past quarter century—the substantial growth of uninsured deposits and the migration of business lending to non-banks. The trends challenged the failed banks and banks like them, and in some cases left them vulnerable to runs. And, using a simple model they constructed, the authors assess regulatory options for reducing the risk of destabilizing runs."