Banks with Peso-Dominated Deposits in Small Open Economies with Aggregate Liquidity Shocks
I extend the traditional Diamond Dybvig framework with aggregate liquidity shocks to small open economies. Currency board may imply perfect risk sharing (with perfect credit markets), contrary to Chang and Velasco’s …ndings (2000). With interim-date borrowing constraints and …xed exchange rates, Wallace’ s (1990) partial suspension of convertibility of deposits is obtained. A banking system with an international lender may implement both allocations without runs. Flexible exchange rates with local-currency denominated deposits improves risk sharing relative to …xed exchange rates when borrowing constraints are present. It also avoids equilibrium bank runs.
|Date of creation:||Oct 2000|
|Date of revision:||Jun 2002|
|Contact details of provider:|| Postal: |
Web page: http://www.udesa.edu.ar
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Diamond, Douglas W & Dybvig, Philip H, 1983.
"Bank Runs, Deposit Insurance, and Liquidity,"
Journal of Political Economy,
University of Chicago Press, vol. 91(3), pages 401-19, June.
- Bryant, John, 1980. "A model of reserves, bank runs, and deposit insurance," Journal of Banking & Finance, Elsevier, vol. 4(4), pages 335-344, December.
- 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.
- Franklin Allen & Douglas Gale, 1976.
"Optimal Financial Crises,"
Center for Financial Institutions Working Papers
97-01, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Edward J. Green & Ping Lin, 2000. "Diamond and Dybvig's classic theory of financial intermediation : what's missing?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 3-13.
- Antinolfi, Gaetano & Huybens, Elisabeth & Keister, Todd, 2001.
"Monetary Stability and Liquidity Crises: The Role of the Lender of Last Resort,"
Journal of Economic Theory,
Elsevier, vol. 99(1-2), pages 187-219, July.
- Gaetano Antinolfi & Elisabeth Huybens, 2000. "Monetary Stability and Liquidity Crises: The Role of the Lender of Last Resort," Econometric Society World Congress 2000 Contributed Papers 1156, Econometric Society.
- Gaetano Antinolfi & Elisabeth Huybens & Todd Keister, 2000. "Monetary Stability and Liquidity Crises: The Role of the Lender of Last Resort," Working Papers 0001, Centro de Investigacion Economica, ITAM.
- Mathias Dewatripont & Jean Tirole, 1994. "The prudential regulation of banks," ULB Institutional Repository 2013/9539, ULB -- Universite Libre de Bruxelles.
- Roberto Chang & Andres Velasco, 1997.
"Financial fragility and the exchange rate regime,"
97-16, Federal Reserve Bank of Atlanta.
- Chang, R. & Velasco, A., 1998. "Financial Fragility and the Exchange Rate Regime," Working Papers 98-05, C.V. Starr Center for Applied Economics, New York University.
- Roberto Chang & Andres Velasco, 1998. "Financial Fragility and the Exchange Rate Regime," NBER Working Papers 6469, National Bureau of Economic Research, Inc.
- Roberto Chang & Andres Velasco, 1999.
"Liquidity crises in emerging markets: Theory and policy,"
99-15, Federal Reserve Bank of Atlanta.
- Roberto Chang & Andrés Velasco, 2000. "Liquidity Crises in Emerging Markets: Theory and Policy," NBER Chapters, in: NBER Macroeconomics Annual 1999, Volume 14, pages 11-78 National Bureau of Economic Research, Inc.
- Roberto Chang & Andres Velasco, 1999. "Liquidity Crises in Emerging Markets: Theory and Policy," NBER Working Papers 7272, National Bureau of Economic Research, Inc.
- Roberto Chang & Andrés Velasco, 1999. "Liquidity Crises in Emerging Markets: Theory and Policy," Documentos de Trabajo 59, Centro de Economía Aplicada, Universidad de Chile.
- Chang, R. & Velasco, A., 1999. "Liquidity Crises in Emerging Markets: Theory and Policy," Working Papers 99-14, C.V. Starr Center for Applied Economics, New York University.
- Enrique Kawamura, 2002. "A note on the credibility of Bank-Run-Preventing Devaluation policies," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(1-2), pages 51-67, January-D.
- Mathias Dewatripont & Jean Tirole, 1993.
"Efficient governance structure: implications for banking regulation,"
ULB Institutional Repository
2013/9655, ULB -- Universite Libre de Bruxelles.
- Dewatripont, Mathias & Tirole, Jean, 1992. "Efficient Governance Structure : Implications for Banking Regulation," IDEI Working Papers 18, Institut d'Économie Industrielle (IDEI), Toulouse.
- Roberto Chang & Andrés Velasco, 2001. "A Model Of Financial Crises In Emerging Markets," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 489-517, May.
When requesting a correction, please mention this item's handle: RePEc:sad:wpaper:27. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tamara Sulaque)The email address of this maintainer does not seem to be valid anymore. Please ask Tamara Sulaque to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.