Could making banks hold only liquid assets induce bank runs?

A-Tier
Journal: Journal of Monetary Economics
Year: 2010
Volume: 57
Issue: 4
Pages: 420-427

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Restrictions placed on bank portfolios are analyzed in a banking model designed to capture the role of checking accounts in facilitating transactions. Forcing banks to hold only liquid assets creates the incentive for liquidity-based runs. Even when a run does not occur, welfare is reduced as a result of overinvestment in the liquid asset.

Technical Details

RePEc Handle
repec:eee:moneco:v:57:y:2010:i:4:p:420-427
Journal Field
Macro
Author Count
2
Added to Database
2026-01-29