April 2021

Unintended Penalties of Unemployment Insurance Advantages: The Role of Banks

Yavuz Arslan, Ahmet Degerli, Gazi Kabaş


We utilize disaggregated U.S. data and a border discontinuity create to inform that extra beneficiant unemployment insurance coverage (UI) insurance policies lower bank deposits. We test several channels that would inform this decline and fetch evidence in step sms lån på minuttet households reducing their precautionary financial savings. Since deposits are the finest and most stable provide of funding for banks, the decrease in deposits affects bank lending. Banks that carry deposits in states sms lån på minuttet beneficiant UI insurance policies squeeze their tiny industry lending. Furthermore, counties which are served by these banks experience a greater unemployment price and lower wage boost.

DOI: https://doi.org/10.17016/FEDS.2021.027

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Final Update:
April 30, 2021

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