Information and Currency Run in a System Without a Safety Net: Argentina and the 'Tequila' Shock

Posted: 3 Aug 1998

See all articles by Liliana B. Schumacher

Liliana B. Schumacher

International Monetary Fund (IMF) - Asia and Pacific Department; George Washington University - Department of International Business

Date Written: Undated

Abstract

This paper studies the bank panic that was triggered in Argentina by the Mexican devaluation of December 20, 1994. The evidence on this panic is unique in several ways: it is the case of a contemporary banking system with no explicit safety net (a currency board), and a case in which the run started as an attack on the currency. The panic allows to test the random-withdrawal vs. informed-based theories of bank runs and to examine the behavior of depositors under a currency run. The findings of the paper provide support to the information-based theories and show that currency runs, such as the Argentine case, can also have a component that is bank-specific and information-based.

JEL Classification: G21, G28, F31

Suggested Citation

Schumacher, Liliana, Information and Currency Run in a System Without a Safety Net: Argentina and the 'Tequila' Shock (Undated). Available at SSRN: https://ssrn.com/abstract=102911

Liliana Schumacher (Contact Author)

International Monetary Fund (IMF) - Asia and Pacific Department ( email )

700 19th Street NW
Washington, DC 20431
United States

George Washington University - Department of International Business ( email )

2023 G Street NW
Washington, DC 20052
United States
202-244-3971 (Phone)
202-244-3971 (Fax)

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