Bank Runs and Policy Interventions under Uncertainty

We study how the speed of withdrawals affects bank fragility by examining two dimensions: unpredictability in outflows and frictions in the timing of policy intervention. We extend Ennis and Keister (2009) by introducing uncertainty into the policymaker’s ex-post suspension problem. When withdrawals are more unpredictable, the policymaker intervenes earlier, making the bank less fragile. In contrast, the frequency of intervention opportunities may have a non-monotonic effect: a modest decrease delays suspension and increases fragility, but when opportunities become sufficiently infrequent, the authority suspends earlier to avoid costly delays.