A recent study by Stanford University, the University of Southern California, Columbia University and Northwestern University shows that the U.S. banking crisis is still likely to erupt widely。While the Fed's aggressive rate hikes to combat high inflation have somewhat weakened the value of the government bonds held by these banks, leading to a deterioration in the financial condition of many banks。

The study shows that while the damage from the U.S. banking crisis now appears to be under effective control, the outbreak of runs on banks that are unusually sensitive to the Fed's rate hikes has directly led to a decline in their credit balances。There are two reasons, first, relatively few banks themselves need to bear relatively more county-level units of deposit and loan demand, the pressure is greater;。

The researchers said this could happen in nearly half of the counties in Missouri, Tennessee and Mississippi, and in all of Vermont, Maine and Hawaii.。They also said it was officials who saw a potential crisis of such magnitude that the Fed, Treasury and FDIC moved together to make sure depositors had access to all their funds even if their accounts exceeded the $250,000 limit on federally insured deposits.。In addition, Fed officials said they would provide "attractive" loans to troubled banks to meet the needs of depositors.。

Researchers say it is because of such protections from the authorities that large corporations have survived their deposits at Silicon Valley banks。However, this does not mean that the risks of the US banking system have been completely eliminated.。They said the risks exposed banks in some less developed parts of the United States。On the one hand, small business lending to these banks may already be declining, and on the other hand, new runs may directly cut off easy access for companies to borrow from these banks。

In addition, the researchers also analyzed that Silicon Valley banks were so affected because the rapid rise in interest rates greatly reduced the value of their asset structure, U.S. debt, resulting in a shrinkage of their existing assets.。So when the crisis occurred and depositors scrambled to withdraw their funds, Silicon Valley Bank had lost its matching asset reserves and had no choice but to declare bankruptcy.。

And when the researchers looked at bank asset data disclosed by federal regulators in 2022, they found that hundreds of banks' balance sheets had deteriorated to varying degrees as a result of the Fed's rapid rate hikes。So the researchers compared the extent to which these banks' assets had shrunk and the number of deposits they had to make regional crisis predictions.。

Projections indicate that these potentially crisis-prone banks are concentrated in low-income neighborhoods, areas with high proportions of black and Hispanic populations, and areas with generally low levels of residential education。When a run occurs, these banks are likely to be forced to sell U.S. debt, the value of which has been greatly reduced, to raise funds to repay depositors' deposits.。

Amit Seru, a Stanford Business School economist and lead author of the study, said large financial institutions are unlikely to quickly fill the lending vacuum in these communities if small banks fail.。He also said the government should ask these banks to raise more money to shore up their balance sheets early to defuse potential risks because "the last thing we want is chaos there."。