Bank Runs as an Equilibrium Phenomenon

Andrew Postlewaite () and Xavier Vives ()

Journal of Political Economy, 1987, vol. 95, issue 3, pages 485-91

Abstract: A standard demand-deposit contract in which individuals are entitled to their full deposit at any time provided the bank is solvent is analyzed in a context in which there are no exogenous events on which agents condition their behavior and a unique equilibrium involving a bank run with positive probability is shown to exist. Copyright 1987 by University of Chicago Press.

Date: 1987
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