Bank failures caused by Large withdrawals: An explanation based purely on liquidity

This equilibrium explains bank failures driven by extreme withdrawals solely on liquidity since they happen because both banks and depositors are illiquid. Furthermore, it does not require much of the elements typically emphasized, including: consumers well informed about the true state of nature, a non-zero consumption after a crisis, consumers' panic and sunspots. We therefore think that aggregate risk in Diamond-Dybvig-like environments can be an important element to explain bank crises.