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Banking Panics and Liquidity in a Monetary Economy

Matsuoka, Tarishi - 2018

This paper studies banks' liquidity provision in the Lagos and Wright model of monetary exchanges. With aggregate uncertainty we show that banks sometimes exhaust their cash reserves and fail to satisfy their depositors' need of consumption smoothing. The banking panics can be eliminated by the...

Persistent link: https://www.econbiz.de/10012930807

Banking Crises

Grossman, Richard S. - 2016

Financial crises have been a common feature of the economic landscape for more than two centuries. The chapter defines banking crises, considers the type of costs that they impose, and outlines the most common causes of banking crises during the past 200 years. The remainder of the chapter...

Persistent link: https://www.econbiz.de/10012988973

Lender of Last Resort and Bank Closure Policy

Freixas, Xavier; Parigi, Bruno Maria - 2021

During the last decades a consensus has emerged that it is impossible to disentangle liquidity shocks from solvency shocks. As a consequence the classical lender of last resort rules, as defined by Thornton and Bagehot, based on lending to solvent illiquid institutions appear ill-suited to this...

Persistent link: https://www.econbiz.de/10013316536

Competition and Stability in Banking

Vives, Xavier - 2013

competition and stability in banking. There are two basic channels through which competition may increase instability: by … incentives to take risk and raise failure probabilities. The competition-stability trade-off is characterized and the … implications of the analysis for regulation and competition policy are derived. It is found that optimal regulation may depend on …

Persistent link: https://www.econbiz.de/10013094726