A Behavioral Model of Demandable Deposits and its Implications for Financial Regulation
AbstractA model is developed which rationalizes contracts that give depositors the right to obtain funds on demand even when depositors intend to use these funds for consumption in the future. This is explained by depositor overoptimism regarding their own ability to collect funds in a run. Capitalized institutions serving depositors with such beliefs emerge in equilibrium even if depositors and bank owners have the same preferences and the same investment opportunities. Various government regulations of these institutions, including minimum capital levels, requirements concerning the assets they may hold, deposit insurance and compulsory clawbacks in bankruptcy can raise the average ex post welfare of depositors.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16620.
Date of creation: Dec 2010
Date of revision:
Note: CF EFG ME
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
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.:
- Itzhak Ben-David & John R. Graham, 2013.
The Quarterly Journal of Economics,
Oxford University Press, vol. 128(4), pages 1547-1584.
- Ben-David, Itzhak & Graham, John R. & Harvey, Campbell R., 2010. "Managerial Miscalibration," Working Paper Series, Ohio State University, Charles A. Dice Center for Research in Financial Economics 2010-12, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Itzhak Ben-David & John R. Graham & Campbell R. Harvey, 2010. "Managerial Miscalibration," NBER Working Papers 16215, National Bureau of Economic Research, Inc.
- Alvaro Sandroni & Francesco Squintani, 2007.
"Overconfidence, Insurance, and Paternalism,"
American Economic Review, American Economic Association,
American Economic Association, vol. 97(5), pages 1994-2004, December.
- Francesco Squintani & Alvaro Sandroni, 2007. "Overconfidence, Insurance and Paternalism," Economics Discussion Papers, University of Essex, Department of Economics 643, University of Essex, Department of Economics.
- Frey, Bruno S. & Pommerehne, Werner W., 1993. "On the fairness of pricing -- An empirical survey among the general population," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 20(3), pages 295-307, April.
- Nicola Gennaioli & Andrei Shleifer & Robert Vishny, 2010.
"Financial Innovation and Financial Fragility,"
NBER Chapters, National Bureau of Economic Research, Inc,
in: Market Institutions and Financial Market Risk
National Bureau of Economic Research, Inc.
- Augustin Landier & David Thesmar, 2009. "Financial Contracting with Optimistic Entrepreneurs," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 22(1), pages 117-150, January.
- Rotemberg, Julio J., 2008.
"Minimally acceptable altruism and the ultimatum game,"
Journal of Economic Behavior & Organization, Elsevier,
Elsevier, vol. 66(3-4), pages 457-476, June.
- Julio J. Rotemberg, 2006. "Minimally acceptable altruism and the ultimatum game," Working Papers, Federal Reserve Bank of Boston 06-12, Federal Reserve Bank of Boston.
- Hasan, Iftekhar & Dwyer, Gerald P, Jr, 1994. "Bank Runs in the Free Banking Period," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 26(2), pages 271-88, May.
- Muhamet Yildiz, 2003. "Bargaining without a Common Prior-An Immediate Agreement Theorem," Econometrica, Econometric Society, Econometric Society, vol. 71(3), pages 793-811, 05.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.