Bank runs in open economies and the international transmission of panics
AbstractIn this paper, we extend the bank run literature to an open economy model. We show that a foreign banking system, by raising deposit rates in the presence of a domestic banking panic, may generate sufficient liquid resources to acquire assets sold by the domestic banking system at bargain prices. In this case, foreign depositors will benefit from the domestic panic. We also show that our simple model is able to generate the spreading of panics. Perhaps not surprisingly, the crucial element in determining the propagation of financial crises is the effect of interest rates on savings decisions.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Economics.
Volume (Year): 27 (1989)
Issue (Month): 1-2 (August)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505552
Other versions of this item:
- Peter M. Garber & Vittorio U. Grilli, 1988. "Bank Runs in Open Economies and The International Transmission of Panics," NBER Working Papers 2764, National Bureau of Economic Research, Inc.
- Garber, P.M. & Grilli, V.U., 1988. "Bank Runs In Open Economies And The International Transmission Of Panics," RCER Working Papers 122, University of Rochester - Center for Economic Research (RCER).
- Garber, P.M. & Grilli, V., 1988. "Bank Runs In Open Economies And The International Transmission Of Panics," Papers, Yale - Economic Growth Center 552, Yale - Economic Growth Center.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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