Depositors Pull Funds, Forcing Banks to Reevaluate Risk-Taking Strategies
The article shows that during the recent financial crisis, banks faced more risk of failure. Depositors reacted by withdrawing their money from troubled banks, especially after Bear Stearns and Lehman Brothers' problems. This led to a decrease in uninsured time deposits. However, when the FDIC raised the deposit insurance limit, depositors became less sensitive to risk.