A new academic study on 2023 bank fragility concludes that the U.S. banking system’s market value of assets is $2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity. “Marked-to-market bank assets have declined by an average of 10% across all the banks, with the bottom fifth percentile experiencing a decline of 20%, according to the study, which was released Monday. Erica Xuewei Jiang of University of Southern California, Gregor Matvos of Northwestern University’s Kellogg School of Management, Tomasz Piskorski of Columbia Business School, and Amit Seru of Stanford University authored the 20-page paper, which studies uninsured deposits at banks. “Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk,” the study said.
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