Bank Runs and Media Freedom: Evidence from Russia

The history of the development of the most countries’ banking sector is associated with such a problem, as the "banking panic". The result of the existence of this phenomenon is a serious economic downturn, encompassing not only financial but also real sector of the economy. Undoubtedly, to maintain the overall stability of the banking sector and prevent ineffective bank runs formed state regulatory measures. The purpose of this study is to evaluate the possibility of reducing the intensity of banking panics by limiting Media freedom. This analysis was conducted on panel data across 79 regions of the Russian Federation over the period from 2001 to 2010. The results indicate that the strategies of depositors depend on the scale of information disclosed in the press. Thus, the level of media independence in the region positively affects the growth of deposits in a period of financial stability and negatively in the crisis. The study revealed that a high level of financial educational has a positive effect on the deposit growth in the regions where the conflict level of the state and media is minimal. These findings are relevant for the development of state measures to maintain the stability of the banking sector.