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Faster bank runs

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  • Shy, Oz

Abstract

Bank depositors now have access to instant (real-time) money transfer and payment services. Therefore, in events such as bank runs, depositors are able to drain their bank account faster than ever before. In addition, the increased use of social media accelerates the spread of bank run information. This article analyzes the policy implications of “faster” bank runs on (i) the optimal delay in bailing out a bank, and consequently (ii) the optimal liquidity reserve requirement. The first one is an ex-post policy decision (after the run begins) whereas the second one is an ex-ante long-term decision.

Suggested Citation

  • Shy, Oz, 2025. "Faster bank runs," European Economic Review, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:eecrev:v:172:y:2025:i:c:s0014292124002447
    DOI: 10.1016/j.euroecorev.2024.104915
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    References listed on IDEAS

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    More about this item

    Keywords

    Faster bank runs; Instant money transfers; Bailout delay; Liquidity reserve requirement; Digital banking;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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