Why Do Bank Runs Look Like Panic? A New Explanation

B-Tier
Journal: Journal of Money, Credit, and Banking
Year: 2008
Volume: 40
Issue: 2‐3
Pages: 535-546

Authors (2)

YEHNING CHEN (not in RePEc) IFTEKHAR HASAN (Fordham University)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

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

Abstract

This paper demonstrates that, even if depositors are fully rational and always choose the Pareto‐dominant equilibrium when there are multiple equilibria, a bank run may still occur when depositors' expectations on the bank's fundamentals do not change. More specifically, a bank run may occur when depositors learn that noisy bank‐specific information will be revealed, or when they learn that precise bank‐specific information will not be revealed. The results in this paper are consistent with the empirical evidence about bank runs. It also implies that suspension of convertibility can improve the efficiency of bank runs.

Technical Details

RePEc Handle
repec:wly:jmoncb:v:40:y:2008:i:2-3:p:535-546
Journal Field
Macro
Author Count
2
Added to Database
2026-01-25