Bank Runs, Fragility, and Credit Easing

Manuel Amador and Javier Bianchi

No 29397, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present a tractable dynamic general equilibrium model of self-fulfilling bank runs, where banks trade capital in competitive and liquid markets but remain vulnerable to runs due to a loss of creditor confidence. We characterize how the vulnerability of an individual bank depends on its leverage position and the economy wide asset prices. We study the effect of credit easing policies, in the form of asset purchases. When a banking crisis is generated by runs, credit easing can reduce the number of defaulting banks and enhance welfare. When the crisis is driven by fundamentals, credit easing may have adverse consequences.

JEL-codes: E44 E58 F34 G01 G21 G33 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-fdg, nep-mac and nep-mon
Note: EFG IFM
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Published as Manuel Amador & Javier Bianchi, 2024. "Bank Runs, Fragility, and Credit Easing," American Economic Review, vol 114(7), pages 2073-2110.

Downloads: (external link)
http://www.nber.org/papers/w29397.pdf (application/pdf)

Related works:
Journal Article: Bank Runs, Fragility, and Credit Easing (2024)
Working Paper: Bank Runs, Fragility, and Credit Easing (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29397

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29397

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().