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Preventing bank runs
Andolfatto, David; Nosal, Ed; Sultanum, Bruno - In: Theoretical Economics 12 (2017) 3, pp. 1003-1028
The work of Diamond and Dybvig, 1983 is commonly understood as a theory of bank runs driven by self …-fulfilling prophecies. Their contribution may alternatively be interpreted as a theory for preventing these bank runs. Absent aggregate risk …-run equilibrium, which suggests that Diamond and Dybvig, 1983 can be understood as a theory of bank runs. The use of direct mechanisms …
Persistent link: https://www.econbiz.de/10012010005
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Preventing bank runs
Andolfatto, David; Nosal, Ed; Sultanum, Bruno - 2014
Diamond and Dybvig (1983) is commonly understood as providing a formal rationale for the existence of bank-run equilibria. It has never been clear, however, whether bank-run equilibria in this framework are a natural byproduct of the economic environment or an artifact of suboptimal contractual...
Persistent link: https://www.econbiz.de/10011460665
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Interbank contagion at work: evidence from a natural experiment
Iyer, Rajkamal; Peydró, José-Luis - 2010
This paper tests financial contagion due to interbank linkages. For identification we exploit an idiosyncratic, sudden shock caused by a large-bank failure in conjunction with detailed data on interbank exposures. First, we find robust evidence that higher interbank exposure to the failed bank...
Persistent link: https://www.econbiz.de/10011605193
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Bank liquidity, interbank markets, and monetary policy
Freixas, Xavier; Martin, Antoine; Skeie, David - 2009
A major lesson of the recent financial crisis is that the interbank lending market is crucial for banks that face uncertainty regarding their liquidity needs. This paper examines the efficiency of the interbank lending market in allocating funds and the optimal policy of a central bank in...
Persistent link: https://www.econbiz.de/10010287158
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Will an optimal deposit insurance always increase financial stability?
Drehmann, Mathias - 2002
In this paper we show that deposit insurance can increase the probability of systemic banking crisis, even though it is optimally designed and its premium is risk related. This is driven by the possibility of contagious bank runs. We prove that contagion only occurs if the correlation between...
Persistent link: https://www.econbiz.de/10010263073
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The optimal level of deposit insurance coverage
Manz, Michael - 2009
This paper develops a global game model that allows for a rigorous analysis of partial deposit insurance and provides the first comparative statics of the optimal level of deposit coverage. The optimal amount of coverage increases with lower bank liquidity requirements, with a higher precision...
Persistent link: https://www.econbiz.de/10010280895
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Zur Reform der Einlagensicherung in Weißrussland - Kritische Analyse und Vergleich mit dem Deutschen Einlagensicherungssystem
Minuk, Olga; Rossaro, Fabiana; Walther, Ursula - 2005
Der aktuell diskutierte Gesetzentwurf für eine Reform der Einlagensicherung in Weißrussland verfolgt das Hauptziel …
Persistent link: https://www.econbiz.de/10010296602
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Asymmetric information and bank runs
Gu, Chao - 2007
It is known that sunspots can trigger panic-based bank runs and that the optimal banking contract can tolerate panic-based runs. The existing literature assumes that these sunspots are based on a publicly observed extrinsic randomizing device. In this paper, I extend the analysis of panic-based...
Persistent link: https://www.econbiz.de/10010292051
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Herding and bank runs
Gu, Chao - 2007
Traditional models of bank runs do not allow for herding effects, because in these models withdrawal decisions are assumed to be made simultaneously. I extend the banking model to allow a depositor to choose his withdrawal time. When he withdraws depends on his liquidity type (patient or...
Persistent link: https://www.econbiz.de/10010292061
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Run equilibria in a model of financial intermediation
Ennis, Huberto M.; Keister, Todd - 2008
We study the Green and Lin (2003) model of financial intermediation with two new features: traders may face a cost of contacting the intermediary, and consumption needs may be correlated across traders. We show that each feature is capable of generating an equilibrium in which some (but not all)...
Persistent link: https://www.econbiz.de/10010283527