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Liquidity Shocks, Banking System Failures, and Supranational Lending of Last Resort Facilities

  • Germana Corrado

    ()

    (University of Rome "Tor Vergata", Faculty of Economics)

In a small open economy with a high share of short term foreign currency denominated debt the arrival of some negative information on banks' investment returns may lead to severe bank runs. We analyse how a supranational institution which acts as an international lender of last resort can cope with banking crises by guaranteeing run-proof bank deposit contracts.

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Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 6 (2005)
Issue (Month): 1 (May)
Pages: 1-24

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Handle: RePEc:cuf:journl:y:2005:v:6:i:1:p:1-24
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  1. Reinhart, Carmen & Kaminsky, Graciela, 1999. "The twin crises: The causes of banking and balance of payments problems," MPRA Paper 14081, University Library of Munich, Germany.
  2. Haizhou Huang & Charles Goodhart, 1999. "A Simple Model of an International Lender of Last Resort," FMG Discussion Papers dp336, Financial Markets Group.
  3. Goodhart, Charles & Illing, Gerhard (ed.), 2002. "Financial Crises, Contagion, and the Lender of Last Resort: A Reader," OUP Catalogue, Oxford University Press, number 9780199247219, March.
  4. Feldstein, Martin, 1999. "A Self-Help Guide for Emerging Markets," Scholarly Articles 2961700, Harvard University Department of Economics.
  5. Chang, R. & Velasco, A., 1999. "Liquidity Crises in Emerging Markets: Theory and Policy," Working Papers 99-14, C.V. Starr Center for Applied Economics, New York University.
  6. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
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  8. Williams, Joseph, 1988. " Banking Panics, Information, and Rational Expectations Equilibrium: Discussion," Journal of Finance, American Finance Association, vol. 43(3), pages 761-63, July.
  9. Chari, V V & Jagannathan, Ravi, 1988. " Banking Panics, Information, and Rational Expectations Equilibrium," Journal of Finance, American Finance Association, vol. 43(3), pages 749-61, July.
  10. C. A. E. Goodhart & H. Huang, 2000. "A Simple Model of an International Lender of Last Resort," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 29(1), pages 1-11, 02.
  11. Brunnermeier, Markus K., 2001. "Asset Pricing under Asymmetric Information: Bubbles, Crashes, Technical Analysis, and Herding," OUP Catalogue, Oxford University Press, number 9780198296980, March.
  12. Jeanne, Olivier & Wyplosz, Charles, 2001. "The International Lender of Last Resort: How Large is Large Enough?," CEPR Discussion Papers 2842, C.E.P.R. Discussion Papers.
  13. Mishkin, Frederic S., 1999. "Lessons from the Asian crisis," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 709-723, August.
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  15. Jacklin, Charles J & Bhattacharya, Sudipto, 1988. "Distinguishing Panics and Information-Based Bank Runs: Welfare and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 568-92, June.
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