Carlson, Mark - Federal Reserve Board (Board of Governors of the … - 2002
There are two competing theories explaining bank panics. One argues that panics are driven by real shocks, asymmetric … information, and concerns about insolvency. The other theory argues that bank runs are self-fulfilling, driven by illiquidity and … national level, however at the local level, both insolvency and illiquidity were important as triggers of bank panics. …