On the fundamental reasons for bank fragility
A substantial body of literature has now developed as a result of efforts to identify the fundamental reasons for the fragility of financial intermediaries in the Diamond-Dybvig theory of banking. Many of these articles focus on the interaction between sequential service and uncertainty about the aggregate need for liquidity in the economy. The articles in this literature are inevitably technical and focus somewhat narrowly on the implications of specific assumptions. Here, we provide a more accessible discussion of the main ideas and findings in this literature. Our discussion can be used as an introduction to the more technical articles or as an organizing framework for understanding the relative contribution of the main articles in this literature.
Volume (Year): (2010)
Issue (Month): 1Q ()
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- James Peck & Karl Shell, 2003.
"Equilibrium Bank Runs,"
Journal of Political Economy,
University of Chicago Press, vol. 111(1), pages 103-123, February.
- Ennis, Huberto M. & Keister, Todd, 2010. "Banking panics and policy responses," Journal of Monetary Economics, Elsevier, vol. 57(4), pages 404-419, May.
- Peck, James & Shell, Karl, 2010. "Could making banks hold only liquid assets induce bank runs?," Journal of Monetary Economics, Elsevier, vol. 57(4), pages 420-427, May.
- Todd Keister & Huberto M. Ennis, 2004.
"Bank Runs and Investment Decisions Revisited,"
2004 Meeting Papers
180, Society for Economic Dynamics.
- Todd Keister & Huberto M. Ennis, 2008.
"Run Equilibria in a Model of Financial Intermediation,"
2008 Meeting Papers
513, Society for Economic Dynamics.
- Huberto M. Ennis & Todd Keister, 2008. "Run equilibria in a model of financial intermediation," Staff Reports 312, Federal Reserve Bank of New York.
- David Andolfatto & Ed Nosal & Neil Wallace, 2006.
"The role of independence in the Green-Lin Diamond-Dybvig model,"
0615, Federal Reserve Bank of Cleveland.
- Andolfatto, David & Nosal, Ed & Wallace, Neil, 2007. "The role of independence in the Green-Lin Diamond-Dybvig model," Journal of Economic Theory, Elsevier, vol. 137(1), pages 709-715, November.
- Postlewaite, Andrew & Vives, Xavier, 1987. "Bank Runs as an Equilibrium Phenomenon," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 485-91, June.
- Green, Edward J. & Lin, Ping, 2003.
"Implementing efficient allocations in a model of financial intermediation,"
Journal of Economic Theory,
Elsevier, vol. 109(1), pages 1-23, March.
- Edward J. Green, 1995. "Implementing Efficient Allocations in a Model of Financial Intermediation," Meeting papers 9506001, EconWPA.
- Edward J. Green & Ping Lin, 1996. "Implementing efficient allocations in a model of financial intermediation," Working Papers 576, Federal Reserve Bank of Minneapolis.
- Andolfatto, David & Nosal, Ed, 2008.
"Bank incentives, contract design and bank runs,"
Journal of Economic Theory,
Elsevier, vol. 142(1), pages 28-47, September.
- Ennis, Huberto M. & Keister, Todd, 2009. "Run equilibria in the Green-Lin model of financial intermediation," Journal of Economic Theory, Elsevier, vol. 144(5), pages 1996-2020, September.
- Huberto M. Ennis & Todd Keister, 2007.
"Bank runs and institutions : the perils of intervention,"
07-02, Federal Reserve Bank of Richmond.
- Huberto M. Ennis & Todd Keister, 2009. "Bank Runs and Institutions: The Perils of Intervention," American Economic Review, American Economic Association, vol. 99(4), pages 1588-1607, September.
- Cooper, Russell & Ross, Thomas W., 1998. "Bank runs: Liquidity costs and investment distortions," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 27-38, February.
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