In Exhibit 2, Panel F shows that 92% of Pinnacle’s deposits were uninsured at the start of the period. Using the Diamond-Dybvig framework, why does this concentration of uninsured deposits make the observed deposit run more predictable?

Based on the patterns in Exhibits 2 and 3, which of the following regulatory reforms would most directly address the vulnerabilities that led to Pinnacle’s distress? (select all that apply)

A bank offers a borrower two deposit products: a 6-month CD paying 4.5% interest and a checking account paying 0.1% interest. The depositor chooses the checking account. This choice reveals:

Panel C of Exhibit 2 shows that Pinnacle’s Net Interest Margin (NIM) fell from 2.8% to 1.1% while Northern Trust’s NIM actually rose from 2.5% to 3.1%. What explains this divergent behavior?

Calculate Harborview Savings Bank’s total liquidity creation. Which value is closest to its LC/TA ratio?

Consider the Pinnacle Growth Bank scenario from Exhibits 2 and 3. Pinnacle’s deposits fell from 55% to 36% of TA while 92% of its deposits were uninsured. Apply the Diamond-Dybvig framework: which model elements are present in this scenario? (select all that apply)

Bayshore Community Bank ($550M) shows the mildest deterioration across all six panels of Exhibit 2 despite being the smallest bank. Which characteristics of its balance sheet profile most likely explain its resilience? (select all that apply)

Summit Trust’s liability structure shows foreign deposits at 3.0% of TA. Under the LC framework, how should foreign deposits be classified and why?

The Diamond-Dybvig model produces two equilibria. In the bad equilibrium, even patient depositors rush to withdraw. What specific model assumption creates the incentive for patient depositors to run?

Using Exhibit 3, calculate the approximate change in Pinnacle’s total liquidity creation between Q1Y1 and Q3Y2. Consider asset-side, liability-side, and off-balance-sheet components. Which statement best describes the net effect?