Maryam Farboodi
Institution
MIT
PhD Year
2014
farboodi@mit.edu
FTG Membership
Member
Website
https://sites.google.com/site/maryamfarboodi/
Featured Work
Mar 1, 2026
Bank Opacity and Deposit Rates
Banks face a dual mandate of raising cheap deposits while avoiding liquidity risk. We propose a novel mechanism whereby banks use portfolio opacity to meet this objective. Specifically, banks choose opaque portfolios to secure cheap long-term funding while trading off insolvency and illiquidity. We show that while opacity lowers deposit rates, it also leaves depositors with only noisy information about the bank’s solvency, making them...
