We construct an endogenous growth model in which bank runs occur with positive probability in equilibrium. In this setting, a bank run has a permanent effect on the levels of the capital stock and of output. In addition, the possibility of a run changes the portfolio choices of depositors and of...

In his recent essay, Bounded Institutions, Yair Listokin examines bounded and unbounded structures as two alternative designs for principals to delegate regulatory authority to their agents. Bounds refer to numerical or quantifiable limitations that are set by the principal on some dimension of...