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Bank Runs, Fragility, and Regulation / Manuel Amador, Javier Bianchi.
- Format:
- Book
- Author/Creator:
- Amador, Manuel.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w32341.
- NBER working paper series no. w32341
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2024.
- Summary:
- We examine banking regulation in a macroeconomic model of bank runs. We construct a general equilibrium model where banks may default because of fundamental or self-fulfilling runs. With only fundamental defaults, we show that the competitive equilibrium is constrained efficient. However, when banks are vulnerable to runs, banks' leverage decisions are not ex-ante optimal: individual banks do not internalize that higher leverage makes other banks more vulnerable. The theory calls for introducing minimum capital requirements, even in the absence of bailouts.
- Notes:
- Print version record
- April 2024.
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