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Towards a Macroeconomic Model of Banking Crises

Author

Listed:
  • Daisuke Ikeda

    (Head of Economic and Financial Studies Division, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: daisuke.ikeda@boj.or.jp))

  • Hidehiko Matsumoto

    (Associate Professor, Faculty of Economics, Keio University (E-mail: hmatsu.hm@gmail.com))

Abstract

Banking crises are infrequent macroeconomic events with the potential to inflict significant and lasting harm on the real economy. Drawing from the empirical literature, this paper highlights five facts on banking crises from a macroeconomic perspective. It conducts a targeted review of the literature on financial frictions and banking crises in a dynamic general equilibrium framework, and introduces a dynamic general equilibrium model of bank runs. The model's ability to account for the five facts is examined, alongside its implications for policy. Finally, the paper explores the challenges of integrating macroprudential policy into the model.

Suggested Citation

  • Daisuke Ikeda & Hidehiko Matsumoto, 2025. "Towards a Macroeconomic Model of Banking Crises," IMES Discussion Paper Series 25-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
    • Handle: RePEc:ime:imedps:25-e-17
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    File URL: https://www.imes.boj.or.jp/research/papers/english/25-E-17.pdf
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    More about this item

    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • 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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