The Library
Bank fragility and growth expectations
Tools
Tools
Tools
Proto, Eugenio (2007) Bank fragility and growth expectations. BE Journal of Economic Analysis & Policy, Vol.7 (No.1). Article 55. doi:10.2202/1935-1682.1720
![[img]](http://wrap.warwick.ac.uk/style/images/fileicons/application_pdf.png)
|
PDF
WRAP_Proto_Bank_fragility.pdf - Requires a PDF viewer. Download (424Kb) |
Official URL: http://dx.doi.org/10.2202/1935-1682.1720
Abstract
Banks supply liquidity to insure individuals against possible short-term consumption shocks. The higher this level of illiquidity insurance the lower the investments in long run assets, and the higher the risk of a bank run generated by a real negative shock. If individuals are sufficiently risk averse, competitive banks trade off liquidity insurance for portfolio risk. High growth expectations, typical of emerging economies, increase the optimal liquidity supply even when this increases the risk of a bank run. On the contrary, deposit contracts offered when economic performances are very uncertain (like in less developed economies), and where output fluctuations are milder (like in developed economies), are less exposed to the risk of a bank run. In this setting, a bail-out in case of crisis is ex-ante Pareto efficient even if it always increases the risk of crisis.
| Item Type: | Journal Article | ||||
|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HG Finance | ||||
| Divisions: | Faculty of Social Sciences > Economics | ||||
| Library of Congress Subject Headings (LCSH): | Banks and banking, International, Development economics, Risk, Rational expectations (Economic theory), Bank insurance | ||||
| Journal or Publication Title: | BE Journal of Economic Analysis & Policy | ||||
| Publisher: | Berkeley Electronic Press | ||||
| ISSN: | 1935-1682 | ||||
| Official Date: | 5 November 2007 | ||||
| Dates: |
|
||||
| Volume: | Vol.7 | ||||
| Number: | No.1 | ||||
| Page Range: | Article 55 | ||||
| DOI: | 10.2202/1935-1682.1720 | ||||
| Status: | Peer Reviewed | ||||
| Access rights to Published version: | Open Access | ||||
| Funder: | Suomen Pankki. Siirtymätalouksien tutkimuslaitos [Bank of Finland Institute for Economies in Transition] (SPST) |
Data sourced from Thomson Reuters' Web of Knowledge
Request changes or add full text files to a record
Repository staff actions (login required)
 |
View Item |
Downloads
Downloads per month over past year
