Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7409599 | Journal of Financial Stability | 2014 | 12 Pages |
Abstract
We study the Diamond-Dybvig model of financial intermediation (Diamond and Dybvig, 1983) under the assumption that depositors have information about previous decisions. Depositors decide sequentially whether to withdraw their funds or continue holding them in the bank. If depositors observe the history of all previous decisions, we show that there are no bank runs in equilibrium independently of whether the realized type vector selected by nature is of perfect or imperfect information. Our result is robust to several extensions.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics, Econometrics and Finance (General)
Authors
Markus Kinateder, Hubert János Kiss,