2019-20 coronavirus outbreak

Financial system

Fell

Biology

Interest rate

Cartography

Virology

Economics

Outbreak

Payment

Business

Coronavirus disease 2019 (COVID-19)

Geography

Monetary economics

Demographic economics

Infectious disease (medical specialty)

Internal medicine

Medicine

Finance

Pandemic

Disease

Review of Financial Studies

Why did banks experience massive deposit inflows during the pandemic? We discover that deposit interest rates at bank branches in counties with higher COVID-19 infection rates fell by more than rates at branches—even branches of the same bank—in counties with lower infection rates. Credit drawdowns, national policies, such as the Payment Protection Program, and a flight-to-safety do not account for these cross-branch changes in deposit rates. Evidence suggests that higher local COVID-19 infection rates are associated with households’ greater anxiety about future job and income losses, anxiety that induces households to reduce spending and increase deposits.

How Did Depositors Respond to COVID-19?