Bank runs in practice and theory
ABSTRACT The paper shows that past bank run episodes in the United States display a common pattern. Runs are endogenous to situations of perceived insolvency concerns resulting from the adoption of risky practices driven by the profit motive within a context of lose/inadequate regulation or deregulation. Risky practices make financial institutions more vulnerable to changes in external conditions. The mainstream approaches to bank runs are based on a characterization of an economy that resembles a cooperative economy (all resources are shared equally by all participants) rather than an entrepreneur economy whose end-motive is profit making. As a result, they provide implausible stories about bank runs. Building on the stylized facts of bank runs this paper presents the main building blocks for an alternative theory.
| Main Authors: | , |
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| Format: | Digital revista |
| Language: | English |
| Published: |
Universidad Nacional Autónoma de México, Facultad de Economía
2023
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| Online Access: | http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0185-16672023000300037 |
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