Panic bank runs

Hubert Janos Kiss, Ismael Rodriguez-Lara and Alfonso Rosa-García

No 1710, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: We provide experimental evidence that panic bank runs occur in the absence of problems with fundamentals and coordination failures among depositors, the two main culprits identified in the literature. Depositors withdraw when they observe that others do so, even when theoretically they should not. Our findings suggest that panic also manifests itself in the beliefs of depositors, who overestimate the probability that a bank run is underway. Loss-aversion has a predictive power on panic behavior, while risk or ambiguity aversion do not.

Keywords: bank runs; beliefs; panic; coordination; observability; loss aversion (search for similar items in EconPapers)
JEL-codes: C7 C9 D8 G2 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2017-04
New Economics Papers: this item is included in nep-ban, nep-exp, nep-gth and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Panic bank runs (2018)
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