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Banks and liquidity creation : a simple exposition of the Diamond-Dybvig model

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  • Douglas W. Diamond

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  • Douglas W. Diamond, 2007. "Banks and liquidity creation : a simple exposition of the Diamond-Dybvig model," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 93(Spr), pages 189-200.
    • Handle: RePEc:fip:fedreq:y:2007:i:spr:p:189-200:n:v.93no.2
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    References listed on IDEAS

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    1. Haubrich, Joseph G. & King, Robert G., 1990. "Banking and insurance," Journal of Monetary Economics, Elsevier, vol. 26(3), pages 361-386, December.
    2. Barth,James R. & Caprio,Gerard & Levine,Ross, 2008. "Rethinking Bank Regulation," Cambridge Books, Cambridge University Press, number 9780521709309, September.
    3. Ennis, Huberto M. & Keister, Todd, 2006. "Bank runs and investment decisions revisited," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 217-232, March.
    4. Bengt Holmstrom & Jean Tirole, 1998. "Private and Public Supply of Liquidity," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 1-40, February.
    5. Douglas W. Diamond & Raghuram G. Rajan, 2005. "Liquidity Shortages and Banking Crises," Journal of Finance, American Finance Association, vol. 60(2), pages 615-647, April.
    6. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    7. Huberto M. Ennis, 2003. "Economic fundamentals and bank runs," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 89(Spr), pages 55-71.
    8. James Peck & Karl Shell, 2003. "Equilibrium Bank Runs," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 103-123, February.
    9. Douglas W. Diamond & Raghuram G. Rajan, 2001. "Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 287-327, April.
    10. Itay Goldstein & Ady Pauzner, 2005. "Demand–Deposit Contracts and the Probability of Bank Runs," Journal of Finance, American Finance Association, vol. 60(3), pages 1293-1327, June.
    11. Gorton, Gary, 1985. "Bank suspension of convertibility," Journal of Monetary Economics, Elsevier, vol. 15(2), pages 177-193, March.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Looking Back: The Financial Crisis Began 10 Years Ago This Week
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2017-08-07 16:35:27
    2. Bank Runs and Panics: A Primer
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2020-03-02 12:38:37

    Citations

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    Cited by:

    1. Brown, Martin & Trautmann, Stefan T. & Vlahu, Razvan, 2012. "Contagious Bank Runs: Experimental Evidence," Working Papers on Finance 1207, University of St. Gallen, School of Finance.
    2. Günther, Susanne, 2014. "Die Vermeidung von Bank Runs und der Erhalt von Marktdisziplin: Das Dilemma der Bankenregulierung?," Arbeitspapiere 142, University of Münster, Institute for Cooperatives.
    3. Labye, Agnès, 2013. "Quel avenir pour la banque universelle? Une analyse empirique appliquée à la zone euro," L'Actualité Economique, Société Canadienne de Science Economique, vol. 89(1), pages 57-86, Mars.
    4. Natnara Chulawate & Supaporn Kiattisin, 2023. "Success Factors Influencing Peer-to-Peer Lending to Support Financial Innovation," Sustainability, MDPI, vol. 15(5), pages 1-16, February.
    5. Calvo, Guillermo, 2012. "Financial crises and liquidity shocks a bank-run perspective," European Economic Review, Elsevier, vol. 56(3), pages 317-326.
    6. Paula Lourdes Hernández Verme & Mónica Karina Rosales Pérez, 2016. "Applications of sudden stops of international capital to the Mexican economy," Working Papers 74, Peruvian Economic Association.
    7. Djelassi, Mouldi & Boukhatem, Jamel, 2020. "Modelling liquidity management in Islamic banks from a microeconomic perspective," Finance Research Letters, Elsevier, vol. 36(C).
    8. Sheunesu Zhou, 2021. "Analyzing the Relationship between Derivative Usage and Systemic Risk in South Africa," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(4), pages 217-234.
    9. Werner, Richard A., 2014. "Can banks individually create money out of nothing? — The theories and the empirical evidence," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 1-19.
    10. Leon, Jorge & Monge, Carlos, 2010. "Riesgo moral asociado al uso de endeudamiento externo de corto plazo por parte del sector financiero [Moral Hazard associated with the use of short-term foreign borrowing by the financial intermedi," MPRA Paper 44486, University Library of Munich, Germany, revised 2010.
    11. Thomas Draper & Stefano Cavagnetto, 2024. "The Von Neumann–Morgenstern Curve and Bank Capital Adequacy Penalties—An Empirical Analysis," Economies, MDPI, vol. 12(6), pages 1-19, June.
    12. Eric Smith & Martin Shubik, 2014. "Runs, panics and bubbles: Diamond–Dybvig and Morris–Shin reconsidered," Annals of Finance, Springer, vol. 10(4), pages 603-622, November.
    13. Osama Omar Jaara & Bassam Omar Jaara & Jamal Shamieh & Usama Adnan Fendi, 2017. "Liquidity Risk Exposure in Islamic and Conventional Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 16-26.
    14. Ammara Sarwar & Wajid Alim & Saleh Nawaz Khan, 2023. "Exploring the Relationship Between Financial Inclusion and Liquidity Creation in The SAARC Countries," Journal of Economic Impact, Science Impact Publishers, vol. 5(1), pages 114-122.
    15. Anthony Evans, 2014. "In Defence of ‘Demand’ Deposits: Contractual Solutions to the Barnett and Block, and Bagus and Howden Debate," Journal of Business Ethics, Springer, vol. 124(2), pages 351-364, October.
    16. Pascal Böni & Heinz Zimmermann, 2024. "The Credit Suisse bailout in hindsight: not a bitter pill to swallow, but a case to follow," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 38(1), pages 1-35, March.
    17. Nora CHIRIȚĂ & Ionuț NICA, 2020. "An approach to measuring credit risk in a banking institution from Romania," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(623), S), pages 65-78, Summer.
    18. Eza Ghassan Al-Zein, 2008. "Reserve Requirements, the Maturity Structure of Debt, and Bank Runs," IMF Working Papers 2008/108, International Monetary Fund.

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    Banks and banking;

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