Economic growth, liquidity, and bank runs

We examine the growth implications of bank runs. To do so, we construct an endogenous growth model in which bank runs occur with positive probability in equilibrium. In this setting, a bank run has a permanent effect on the capital stock and on the level of output. In addition, the possibility of a...

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Autores principales: Ennis, Huberto María, Keister, Todd
Formato: Objeto de conferencia
Lenguaje:Inglés
Publicado: 2002
Materias:
Ciencias Económicas
banco
crecimiento económico
Acceso en línea:http://sedici.unlp.edu.ar/handle/10915/3785
http://www.depeco.econo.unlp.edu.ar/jemi/2002/trabajo5.pdf
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SEDICI (UNLP) de Universidad Nacional de La Plata
id I19-R120-10915-3785
record_format dspace
institution Universidad Nacional de La Plata
institution_str I-19
repository_str R-120
collection SEDICI (UNLP)
language Inglés
topic Ciencias Económicas
banco
crecimiento económico
spellingShingle Ciencias Económicas
banco
crecimiento económico
Ennis, Huberto María
Keister, Todd
Economic growth, liquidity, and bank runs
topic_facet Ciencias Económicas
banco
crecimiento económico
description We examine the growth implications of bank runs. To do so, we construct an endogenous growth model in which bank runs occur with positive probability in equilibrium. In this setting, a bank run has a permanent effect on the capital stock and on the level of output. In addition, the possibility of a bank run changes the portfolio choice of banks and thereby affects the long-run growth rate. We consider two different equilibrium selection rules. In the first, a run is triggered by sunspots and occurs with a fixed probability. A higher probability of a run in this case leads banks to hold a more liquid portfolio, which decreases total investment and thereby reduces capital formation. Hence the economy grows slower, even when a run does not occur. Under the second selection rule, the probability of a run is influenced by the bank's portfolio choice. This leads banks to place more resources in long-term investment, and the economy both grows faster and experiences fewer runs.
format Objeto de conferencia
Objeto de conferencia
author Ennis, Huberto María
Keister, Todd
author_facet Ennis, Huberto María
Keister, Todd
author_sort Ennis, Huberto María
title Economic growth, liquidity, and bank runs
title_short Economic growth, liquidity, and bank runs
title_full Economic growth, liquidity, and bank runs
title_fullStr Economic growth, liquidity, and bank runs
title_full_unstemmed Economic growth, liquidity, and bank runs
title_sort economic growth, liquidity, and bank runs
publishDate 2002
url http://sedici.unlp.edu.ar/handle/10915/3785
http://www.depeco.econo.unlp.edu.ar/jemi/2002/trabajo5.pdf
work_keys_str_mv AT ennishubertomaria economicgrowthliquidityandbankruns
AT keistertodd economicgrowthliquidityandbankruns
bdutipo_str Repositorios
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