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A Bank Run in a Classroom: Do Smart Depositors Withdraw on Time?

Maria Semenova, National Research University Higher School of Economics

Econ Beats: A Semester Long, Interdisciplinary, Project-Based Learning Assignment

Abdullah A. Al-Bahrani, Northern Kentucky University - Department of Economics and Finance
Bradley Libis, Northern Kentucky University
Sara Drabik, Northern Kentucky University
John Gibson, Northern Kentucky University


ECONOMICS EDUCATOR: COURSES, CASES & TEACHING eJOURNAL

"A Bank Run in a Classroom: Do Smart Depositors Withdraw on Time?" Free Download
Higher School of Economics Research Paper No. WP BRP 64/FE/2018

MARIA SEMENOVA, National Research University Higher School of Economics
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This paper discusses whether being smart makes depositors less prone to get involved in a panic bank run. We conduct a series of experiments with undergraduate and graduate students from Moscow and Saint-Petersburg, modelling the a-la Diamond-Dybvig deposit market with liquidity shocks, changing macroeconomic conditions and risk-based investment technologies. Our results suggest that withdrawing on time is profitable, as the average returns of depositor investments are higher, especially if the other depositors in the bank also withdraw on time. Smarter depositors – those having better academic achievements – choose the strategy of avoiding early withdrawals more frequently: each additional grade point (out of ten) adds 9 p.p. to the share of rounds where a depositor withdraws on time. This result adds to the evidence that financial literacy – even measured in a very simple way – may prevent a coordination failure in the deposit market. Our results also suggest that panic withdrawals are more probable in markets with poorer economic conditions (liquidity shocks, less profitable or less liquid investments, costly financial information), but depositors show weak sensitivity to the risks of bank investments. Depositors of medium-sized banks withdraw on time more frequently compared to those in small or large banks.

"Econ Beats: A Semester Long, Interdisciplinary, Project-Based Learning Assignment" Free Download
Al-Bahrani, Abdullah; Brad Libis, Sara Drabik, John Gibson. ?Econ Beats: A Semester Long, Interdisciplinary, Project-Based Learning Assignment?. Journal of Economics and Finance Education. 16 (3), 1-11, 2017.

ABDULLAH A. AL-BAHRANI, Northern Kentucky University - Department of Economics and Finance
Email:
BRADLEY LIBIS, Northern Kentucky University
Email:
SARA DRABIK, Northern Kentucky University
Email:
JOHN GIBSON, Northern Kentucky University
Email:

Innovative teaching in economic education has used media, music, and popular culture. We provide educators with a semester-long, interdisciplinary, collaborative, active learning project called Econ Beats. The project requires students from Economics to work with media students over an entire semester to create a music video that explains economic content. The highlight of project is a public screening that showcases students’ projects. We provide a blue print to educators on how to best incorporate the assignment and plan the event. The project brings attention to economics, and is a way to engage the community.

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