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Are bank runs contagious?

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  • Ted Temzelides

Abstract

History shows that banks are subject to runs and panics. Researchers disagree, however, about whether runs are contagious: that is, do problems at insolvent banks spread to solvent ones? If runs are contagious, what, if anything, can be done to stop the spread, and what are the implications for deposit insurance and banking regulations? In this article, Ted Temzelides reviews the basic theory and presents some recent evidence on contagious bank runs

Suggested Citation

  • Ted Temzelides, 1997. "Are bank runs contagious?," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 3-14.
    • Handle: RePEc:fip:fedpbr:y:1997:i:nov:p:3-14
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/1997/november-december/brnd97tt.pdf
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    References listed on IDEAS

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    1. R. Glenn Hubbard, 1991. "Financial Markets and Financial Crises," NBER Books, National Bureau of Economic Research, Inc, number glen91-1.
    2. Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, vol. 3(1), pages 2-50, October.
    3. Charles W. Calomiris & Gary Gorton, 1991. "The Origins of Banking Panics: Models, Facts, and Bank Regulation," NBER Chapters, in: Financial Markets and Financial Crises, pages 109-174, National Bureau of Economic Research, Inc.
    4. Aharony, Joseph & Swary, Itzhak, 1996. "Additional evidence on the information-based contagion effects of bank failures," Journal of Banking & Finance, Elsevier, vol. 20(1), pages 57-69, January.
    5. Loretta J. Mester, 1990. "Curing our ailing deposit-insurance system," Business Review, Federal Reserve Bank of Philadelphia, issue Sep, pages 13-24.
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    Cited by:

    1. Myron Kwast & S. Passmore, 1999. "The Subsidy Provided by the Federal Safety Net: Theory and Evidence," Journal of Financial Services Research, Springer;Western Finance Association, vol. 16(2), pages 125-145, December.
    2. Marco Lossani & Piergiovanna Natale & Patrizio Tirelli, 1999. "Disegno delle istituzioni e stabilità finanziaria nell'Unione Monetaria Europea," Economia politica, Società editrice il Mulino, issue 2, pages 243-270.
    3. James J. McAndrews, 1997. "Network issues and payment systems," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 15-25.

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    Keywords

    Bank failures;

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