BIS Working Papers No 107 Bank runs , welfare and policy implications
نویسنده
چکیده
This paper proposes a model in which bank runs are closely related to the state of the business cycle. The benchmark model shows that, in a market economy, there are welfare losses due to the existence of bank runs. Extensions of the model explore the welfare effects of various government policies. The results suggest that an interest-cap deposit insurance scheme is an efficient policy to prevent bank runs, while other policies, including the suspension of convertibility, a penalty on short-term deposits and full-coverage deposit insurance schemes, will all have adverse side effects. JEL Classification Numbers: G21, G28, E5
منابع مشابه
Innovations in credit risk transfer: implications for financial stability, July 2008
BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The views expressed in them are those of their authors and not necessarily the views of the BIS. Limited extracts may be reproduced or translated provided the source is stated. the BIS held its Sixt...
متن کاملBis Working Papers Bank Runs without Self-fulfilling Prophecies Monetary and Economic Department
This paper proposes that bank runs are unique equilibrium outcomes instead of self-fulfilling prophecies. By assuming that depositors make their withdrawal decisions sequentially, the model provides an equilibrium-selection mechanism in the economy. A bank run would occur if and only if depositors perceive a low return on bank assets. Furthermore, a panic situation arises only when the market i...
متن کاملThe costs and benefits of moral suasion: Evidence from the rescue of long-term capital management - BIS Working Papers 103 - August 2001
This study examines the level of unsecured borrowing done by the firms that would ultimately rescue Long-Term Capital Management in the days leading up to the hedge funds rescue. Although there is some evidence that these banks borrowed less at the height of the crisis, further examination reveals that this reduction in borrowing was demand-driven and did not result from rationing on the part ...
متن کاملWorking Paper 09 - 01 January 2009
Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded offi cial Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Ban...
متن کاملNew financing trends in Latin America: a bumpy road towards stability, February 2008
Papers in this volume were prepared for a meeting organised by the BIS and the Federal Reserve Bank (FRB) of Atlanta in Mexico City in May 2007. The views expressed are those of the authors and do not necessarily reflect the views of the BIS or the institutions represented at the meeting. Individual papers (or excerpts thereof) may be reproduced or translated with the authorisation of the autho...
متن کامل