Economic Fundamentals and Bank Runs
FRB Richmond Economic Quarterly, Vol. 89, No. 2, Spring 2003, pp. 55-71
17 Pages Posted: 5 Dec 2012
Date Written: 2003
Recent research has argued that the multiple-equilibria explanation of bank runs is inconsistent with a basic stylized fact: bank runs tend to occur under poor economic conditions. This conclusion is not well justified. Reasonable theories that explain bank runs as self-fulfilling events can also explain the correlation of bank runs with deteriorating economic fundamentals.
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