Can Banks Provide Liquidity in a Financial Crisis?

The article examines how commercial bank deposits and lending have evolved during the economic crisis compared with past episodes of financial stress in the U.S. It compares the 2007 to 2009 financial crisis with previous financial market disruptions and explores whether deposits and loans increased less at banks where deposits were more likely to be viewed as unsafe. It highlights that bank deposit funds cannot be assumed to be robust to any type of market liquidity stress.