Sequential decisions in the Diamond-Dybvig banking model

Markus Kinateder and Hubert Janos Kiss

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: We study the Diamond-Dybvig model of financial intermediation (JPE, 1983) under theassumption that depositors have information about previous decisions. Depositors decidesequentially whether to withdraw their funds or continue holding them in the bank. If depositorsobserve the history of all previous decisions, we show that there are no bank runs in equilibriumindependently of whether the realized type vector selected by nature is of perfect or imperfectinformation.JEL classification numbers:

Keywords: Bank Run; Imperfect Information; Perfect Bayesian Equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D82 G21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2012-06
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cta, nep-gth and nep-mic
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Sequential decisions in the Diamond–Dybvig banking model (2014)
Working Paper: Sequential decisions in the Diamond-Dybvig banking model (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2012-16

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