Teaching Bank Runs with Classroom Experiments
Once relegated to cinema or history lectures, bank runs have become a modern phenomenon that captures the interest of students. We use a simple classroom experiment based upon the Diamond-Dybvig Model (1983) to demonstrate how a bank run, a seemingly irrational event, can occur rationally. We then present possible topics for discussion including various ways to prevent bank runs and moral hazard.
|Date of creation:||12 Jan 2009|
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- Shy Oz & Stenbacka Rune, 2008. "Rethinking the Roles of Banks: A Call for Narrow Banking," The Economists' Voice, De Gruyter, vol. 5(2), pages 1-4, June.
- Kaplan, T.R., 2000.
"Why Banks Should Keep Secrets,"
0014, Exeter University, Department of Economics.
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