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Moral Hazard in a model of Bank Run with Noisy Signals

Author

Listed:
  • Boonprakaikawe, Juntip

    (University of Warwick)

  • S. Ghosal

Abstract

We show that multiple equilibria exist in a model of bank run with moral hazard. Furthermore, this is true even with noisy signals on the economic fundamentals. We argue that the conditions under which this happens can arise naturally in models of banking with moral hazard problem.

Suggested Citation

  • Boonprakaikawe, Juntip & S. Ghosal, 2003. "Moral Hazard in a model of Bank Run with Noisy Signals," Royal Economic Society Annual Conference 2003 27, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:27
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    More about this item

    Keywords

    banking; fundamentals; signals; equilibria;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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