Title of article
Could making banks hold only liquid assets induce bank runs?
Author/Authors
James Peck، نويسنده , , Karl Shell، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2010
Pages
8
From page
420
To page
427
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.
Keywords
Bank runsBank stabilityDeposit contractsGlass–Steagall bankingMechanism designPortfolio restrictionsSunspot equilibrium
Journal title
Journal monetary economics
Serial Year
2010
Journal title
Journal monetary economics
Record number
713556
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