Patrick Bolton
Institution
Columbia University
PhD Year
1986
Phone
212-854-9245
pb2208@columbia.edu
FTG Membership
Fellow
Website
https://www0.gsb.columbia.edu/faculty/pbolton
Featured Work
Jul 14, 2025
Dynamic Banking and the Value of Deposits
We propose a theory of banking in which banks cannot perfectly control deposit flows. Facing uninsurable loan and deposit shocks, banks dynamically manage lending, wholesale funding, deposits, and equity. Deposits create value by lowering funding costs. However, when the bank is undercapitalized and at risk of breaching leverage requirements, the marginal value of deposits can turn negative as deposit inflows, by raising leverage, increase the...
