The Influence of Media Freedom on Bank Panics during Financial Crises: Cross-Country Analysis

This paper aims to identify whether it is possible to temporarily decrease the amount of information about deteriorating financial conditions in a country in order to decrease the probability of a bank panic and, as a consequence, a bank run, which can lead to the collapse of the whole banking system during a crisis period. To achieve this, a cross-country empirical analysis is conducted on the panel data over 28 countries for which consequences of the financial crisis started in 2007-2009 have been evident, the time dimension is chosen from 2001 until 2016. The obtained results support that in countries, where the regulation of different media channels was less strong during the crisis and risks taken by banks were higher, growth rates of private deposits decreased more considerably; this effect is amplified in countries with a higher financial literacy of population.