that the U.S. Postal Savings System played in commercial bank closures during the Great Depression. The system offered …

The majority of bank liabilities are deposits typically not withdrawn for extended periods. We propose a dynamic model … effects on bank dynamics. Interest rate cuts produce delayed increases in bank risk which are stronger in low rate regimes …. Deposit insurance can exacerbate the deposit dilution and amplify the increase in bank risk …

Motivated by the regional bank crisis of 2023, we model the impact of interest rates on the liquidity risk of banks … valuable if depositors remain in the bank. This creates run incentives for uninsured depositors. We show that a run equilibrium … the bank. The liquidity risk of the bank thus increases with interest rates. We provide a formula for the bank's optimal …