Cipriani, Marco; Martin, Antoine; McCabe, Patrick E.; … - Federal Reserve Board (Board of Governors of the … - 2014
intermediary to impose redemption fees or gates in a crisis--a form of suspension of convertibility--can lead to preemptive runs … uncertainty is resolved before redeeming if redemption fees or gates cannot be imposed, but those same investors would redeem … preemptively, if fees or gates are possible. Second, we show that for the intermediary, which maximizes expected utility of only …