Why do bank runs look like panic? : a new explanation
Chen, Yehning; Hasan, Iftekhar (01.07.2006)
Numero
19/2006Julkaisija
Suomen Pankki
2006
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-20140807678Tiivistelmä
This paper demonstrates that, even if depositors are fully rational and always choose the Pareto dominant equilibrium when there are multiple equilibria, a bank run may still occur when depositors' expectations of the bank's fundamentals do not change.More specifically, a bank run may occur when depositors learn that noisy bank-specific information is revealed, or when they learn that precise bank-specific information is not revealed.The results in this paper are consistent with empirical evidence about bank runs. It also implies that suspension of convertibility can improve the efficiency of bank runs. Key words: bank run, banking panic, suspension of convertibility JEL classification numbers: G21, G28
Julkaisuhuomautus
Published in Journal of Money, Credit and Banking, Volume 40, Issue 2-3 , March/April 2008, Pages 535-546