Risk in its various forms and how it is evaluated was the overriding theme of the 2023 Community Banking Research Conference, held last fall at the St. Louis Fed. The annual conference—sponsored by the Federal Reserve System, the Conference of State Bank Supervisors (CSBS) and the Federal Deposit Insurance Corp. (FDIC)—spotlights emerging research on issues important to the community banking industry and features keynote addresses by leading community bankers and regulators. More than 1,100 academics, bankers and regulators participated in person or virtually.

The conference featured nine papers, two poster session papers, several keynote addresses and highlights from the 2023 CSBS Annual Survey of Community Banks (PDF). The conference also included a presentation from the University of Tennessee-Martin student team, winners of the 2023 CSBS Case Study Competition.

Presentations featuring these papers and reactions from academic and community banking discussants were recorded and are available on the conference website.

Risky Business

The academic papers were grouped by the type of risk examined: interest rate risk, environmental risk and credit risk. The papers in the first session, Interest Rate Risk and Depositor Runs, were especially timely because they examined the causes and consequences of turmoil in the spring of 2023 that contributed to three regional bank failures.

In “Dynamic Deposits: The Role of Inflows on Future Outflows” (PDF), authors Michael Gelman of the University of Delaware and Andrew MacKinlay of Virginia Tech examined the consequences of large inflows of uninsured deposits on banks. They found that banks with these large inflows take on riskier assets and become vulnerable to panic-based runs, especially as interest rates increase. They noted that high uninsured deposit inflows can serve as an early indicator for changes in bank risk and future outflows or runs.

The second paper in that session, “Banks’ Motivations for Designating Securities as Held to Maturity” (PDF), examined how banks categorize securities held as assets and the influence of financial accounting and regulatory capital rules on those decisions. Authors Sehwa Kim of Columbia University, Seil Kim of Baruch College-CUNY and Stephen Ryan of New York University found evidence that banks categorize securities as “held to maturity (HTM)” versus “available for sale (AFS)” when the HTM label provides preferred financial accounting and regulatory capital treatment as opposed to the intent and ability to hold those securities to maturity. The authors said their findings support recent calls to eliminate the HTM category as well as a rule that insulates regulatory capital from the effects of unrealized gains and losses in securities holdings.1

In “Social Media as a Bank Run Catalyst” (PDF), J. Anthony Cookson of the University of Colorado-Boulder and his four co-authors examined whether exposure to social media raises the risk of or amplifies bank runs, rather than just reflecting it. Their paper was motivated by the well-publicized involvement of social media and instant messaging in the bank run that led to the collapse of Silicon Valley Bank in March 2023. Their key finding was that during a bank run, the intensity of Twitter (now X) conversation about a bank predicts stock market losses at the hour frequency, and those losses are stronger for banks with risk factors for a run—such as large uninsured deposit bases and unrealized losses in securities. Coordination is a known factor in bank runs; social media can amplify that coordination because of its speed and public visibility. The authors noted that the potential spread of inaccurate information via social media has implications for banking stability.

For More Information

I encourage you to look at these first session papers as well as those presented on environmental risk in Session 2 and credit risk in Session 3; they are all available on the conference’s website, communitybanking.org, along with two poster session papers that were presented via video.

The St. Louis Fed has hosted the annual Community Banking Research Conference, on behalf of the Federal Reserve, the CSBS and the FDIC, since its inception in 2013. The papers and videos from all past proceedings are available on the conference website. The 12th annual Community Banking Research Conference is scheduled for Oct. 2-3, 2024. Updates on the 2024 conference will be posted to the conference website and on X, formerly Twitter (follow @CBResearchConf).


  1. For a related analysis of the effects of unrealized losses on banks’ investment securities and capital positions, see my Feb. 9, 2023, On the Economy blog post “Rising Interest Rates Complicate Banks’ Investment Portfolios.”