D'Avino, Carmela and Lucchetta, Marcella (2010): Opacity of banks and runs with solvency.
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In absence of bank risk-taking behavior, opacity is defined as the inability of depositors, speculators and central banker to disentangle default risk and asset's return from the asset's value. We show the conditions under which opacity leads to runs on a solvent bank in equilibrium and uncertainty on fundamental values of the asset. The main repercussion of the opacity is, however, on the central bank's policy response which is inefficient during a banking crisis.
|Item Type:||MPRA Paper|
|Original Title:||Opacity of banks and runs with solvency|
|Keywords:||Opacity, Bank Runs, Central Bank Intervention, Cash-in-Market Pricing.|
|Subjects:||G - Financial Economics > G1 - General Financial Markets
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
G - Financial Economics > G0 - General > G01 - Financial Crises
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Carmela D'Avino|
|Date Deposited:||11. Aug 2010 00:50|
|Last Modified:||16. Feb 2013 01:04|
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Opacity of Banks and Runs with Solvency. (deposited 31. Jul 2010 01:23)
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