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Moral Hazard in a model of Bank Run with Noisy Signals


  • Boonprakaikawe, Juntip

    (University of Warwick)

  • S. Ghosal


We show that multiple equilibria exist in a model of bank run with moral hazard. Furthermore, this is true even with noisy signals on the economic fundamentals. We argue that the conditions under which this happens can arise naturally in models of banking with moral hazard problem.

Suggested Citation

  • Boonprakaikawe, Juntip & S. Ghosal, 2003. "Moral Hazard in a model of Bank Run with Noisy Signals," Royal Economic Society Annual Conference 2003 27, Royal Economic Society.
  • Handle: RePEc:ecj:ac2003:27

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    banking; fundamentals; signals; equilibria;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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