Exogenous Shocks, Deposit Runs and Bank Soundness: A Macroeconomic Framework

Posted: 31 Jan 1998

See all articles by Mario I. Blejer

Mario I. Blejer

Central Bank of Argentina

Ernesto V. Feldman

International Monetary Fund (IMF)

Andrew Feltenstein

Georgia State University - Department of Economics

Abstract

In a model where all banks are initially solvent, an exogenous shock affects confidence, causing a flight from deposits into domestic and foreign currency. Real interest rates increase unexpectedly affecting firms and raising the share of the banks' nonperforming assets. This increase causes genuine solvency problems and accelerates the bank run.

JEL Classification: D58, E42, G21

Suggested Citation

Blejer, Mario I. and Feldman, Ernesto V. and Feltenstein, Andrew, Exogenous Shocks, Deposit Runs and Bank Soundness: A Macroeconomic Framework. Available at SSRN: https://ssrn.com/abstract=56247

Mario I. Blejer

Central Bank of Argentina

Reconquista 266
Edificio Central, piso 7
Buenos Aires, 1003
Argentina

Ernesto V. Feldman

International Monetary Fund (IMF)

700 19th Street NW
Washington, DC 20431
United States

Andrew Feltenstein (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-4130093 (Phone)

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