Sunspot bank runs in competitive versus monopolistic banking systems

Tarishi Matsuoka

Economics Letters, 2013, vol. 118, issue 2, 247-249

Abstract: This paper extends the Diamond and Dybvig (1983) model to compare two banking economies: one with a competitive banking system and another with a monopolistic one. It is shown that a competitive banking system is more fragile than a monopolistic one in the sense that the parameter set stipulating that a bank run equilibrium exists in the competitive banking system dominates the set in the monopolistic one.

Keywords: Bank runs; Competitive banks; Monopolistic bank (search for similar items in EconPapers)
JEL-codes: E44 G21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:118:y:2013:i:2:p:247-249

DOI: 10.1016/j.econlet.2012.11.002

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