D'Avino, Carmela and Lucchetta, Marcella (2010): Opacity of Banks and Runs with Solvency.
Download (341kB) | Preview
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, 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:||31. Jul 2010 01:23|
|Last Modified:||30. Dec 2015 22:04|
Allen, Franklin, and Gale, Douglas "Optimal Financial Crises". The Journal of Finance, August 1998, LIII , n. 4.
Allen, Franklin, and Gale, Douglas "Financial Contagion". The Journal of Political Economy, February 2000, 108 (1), pp. 1-33.
Allen, Franklin, and Gale, Douglas "Asset Price Bubbles and Monetary Policy". Global Governance and Financial Crisis, 2004, Edited by Routledge.
Cordella, T. and E. L. Yeyati. "Public Disclosure and Bank Failures". IMF Staff Papers, 1998, n.45.
Diamond, Douglas W., and Dybvig, Phillip H. "Bank Runs, Deposit Insurance, and Liquidity". The Journal of Political Economy, June 1983, 91 (3), pp. 401-419.
Estrella, Arturo "Bank Capital and Risk: Is Voluntary Disclosure Enough?". Journal of Financial Services Research, 2004, 26 (2), pp. 145-160.
Myers, S. and R. Rajan. "The Paradox of Liquidity". Quarterly Journal of Economics, 1995. 113, 733---771.
Morgan, Donald P. "Rating Banks: Risk and Uncertainty in an Opaque Industry". The American Economic Review, September 2002, 92 (4), pp. 874-888.
Wagner, Wolf "Financial Development and the Opacity of Banks ". Economics Letters, 2007, 97 (1), pp. 6-10.
Available Versions of this Item
- Opacity of Banks and Runs with Solvency. (deposited 31. Jul 2010 01:23) [Currently Displayed]