Leonello, Agnese; Mendicino, Caterina; Panetti, Ettore; … - 2022
Does the level of deposits matter for bank fragility and efficiency? In a banking model with endogenous bank runs and a … bank runs. In an economy with panic-driven runs, higher deposits make banks less fragile, while the opposite is true when … runs are only driven by fundamentals. The effect of deposits is not internalized by depositors. A saving externality arises …