liquidity shortages in a banking system where banks are characterized by the amount of capital, cash reserves and their exposure …

important during the National Banking Era. Nevertheless, suspensions of deposit convertibility and liquidity shortfalls … continued to occur during banking panics. Eventually, efforts to ensure that banks remained liquid resulted in a shift away from …

Monetary economists have long recognized a tension between the benefits of fractional reserve banking, such as the … reserve banking, such as the risk of insolvency for each bank. The goal of this paper is to show that a specific form of … private bank coalition (a joint-liability arrangement) allows the members of the banking system to engage in fractional …

Monetary economists have long recognized a tension between the benefits of fractional reserve banking, such as the … the risk of in-solvency for each bank and the associated losses to bank liability holders. I show that a specific banking … banks to illiquid banks, so it is possible to select a socially efficient reserve ratio in the banking system that preserves …