June 2024

Trademarks in Banking

Ryuichiro Izumi, Antonis Kotidis, and Paul E. Soto


One in five banks in the United States share a similar name. This can increase the likelihood of confusion among customers in the event of an idiosyncratic shock to a similarly named bank. We find that banks that share their name with a failed bank experience a half percent drop in transaction deposits relative to banks with similar characteristics but different name. This effect doubles for failures that are covered in media. We rationalize our findings via a model of financial contagion without fundamental linkages. Our model explains that when distinguishing banks is more costly due to similar trademarks, depositors are more likely to confuse their banks' condition resulting in financial contagion.

Keywords: Bank Failures, Bank Runs, Banking, Trademarks

DOI: https://doi.org/10.17016/FEDS.2024.044

PDF: Full Paper

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Last Update: June 14, 2024