The paradigm that financial markets are efficient has provided the intellectual backbone for the deregulation of the banking sector since the 1980s, allowing universal banks to be fully involved in financial markets, and investment banks to become involved in traditional banking. There is now overwhelming evidence that financial markets are not efficient. Bubbles and crashes are an endemic feat...

In this paper, we consider a model in which spatial separation and limited communication create a transactions role for currency, and in which aggregate uncertainty associated with agents’ patterns of movement, creates a role for banks and allows the possibility of banking failures. We show that banks provide complete insurance in states of the world where there are no banking failures and that...

We investigate the effectiveness of initiating deposit insurance at the outset of a banking crisis. Using a conjoint analysis approach that allows us to consider the simultaneous impact of multiple deposit insurance attributes and various counterfactuals, we ask a multinational sample of respondents how they would view hypothetical account profiles following the failure of a large competing ban...

This paper examines the corporate funding flows of Irish credit institutions over the period 2009 to end-2010. The analysis examines the daily net movement across the consolidated corporate and retail deposit books of the domestic Irish banking sector and models these flows as a function of bank specific measures of risk, sovereign influences and general macro-financial conditions. The internat...

In order to protect the public's confidence in deposit money, governments usually guarantee bank deposits implicitly or through an explicit deposit insurance system. Thus bank insolvency does not induce immediate bank runs. In many episodes of banking crises, several years passed quietly after bank insolvency had occurred, with the insolvency continuing to develop under the surface, and the ras...