The Price of Inconvertible Deposits: The Stock Market Boom During the Argentine Crisis
12 Pages Posted: 13 May 2003
Date Written: April 2003
The Argentine crisis witnessed, among other things, a deposit run, the suspension of deposit convertibility, and a "boom" in the stock market. The authors argue that this boom reflects the cost that depositors were willing to incur to get their money out of the banking system, in light of the impending risks. This boom was generalized to all stocks and more pronounced in liquid stocks. Furthermore, the boom was a symptom that deposits were effectively restricted and that investors were not able to circumvent capital controls.
This paper - a product of Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to understand financial crises.
JEL Classification: F3, G1
Suggested Citation: Suggested Citation