Banking Without Deposit Insurance or Bank Panics: Lessons From a Model of the U.S. National Banking System
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چکیده
منابع مشابه
Liquidity Provision vs. Deposit Insurance: Preventing Bank Panics without Moral Hazard?
In this paper I ask whether a central bank policy of providing liquidity to banks during panics can prevent bank runs without causing moral hazard. This kind of policy has been widely advocated, most notably by Bagehot (1873). To analyze such a policy, I build a model with three key features: 1) bank panics can occur in equilibrium, 2) there can be moral hazard, 3) the central bank can create m...
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The collapse of the savings and loan industry and the failure of large numbers of commercial banks in the 1980s have generated a reexamination of bank regulation in the United States and a new banking act. Despite this increased attention, no consensus about how to reform the banking system has emerged. Instead, proposals range from eliminating deposit insurance and relying solely on market dis...
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Banks are a vital part of the economy because they provide an important channel through which many businesses get their financing. However, as we know from the history of the United States and other countries, banks can be subject to runs and panics. A panic that encompasses a large part of the banking system can seriously disrupt economic activity. During a run, a bank experiences much heavier...
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Bank runs in the literature take the form of withdrawals of demand deposits payable in real goods, which deplete a xed reserve of goods in the banking system. That framework describes traditional bank runs based on currency withdrawals as occurred historically in the U.S. and more recently in developing countries. However, in a modern banking system, large withdrawals typically take the form o...
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Deposit insurance was introduced in the United States during the Great Depression primarily to promote financial stability. Stability is enhanced because deposit insurance reduces the likelihood of a bank run. During its first four decades, deposit insurance appeared to work well as few banks failed. But in the 1980s, a wave of financial troubles in the banking and thrift industry exposed an un...
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