Faster bank runs

Oz Shy

European Economic Review, 2025, vol. 172, issue C

Abstract: Bank depositors now have access to instant (real-time) money transfer and payment services. Therefore, in events such as bank runs, depositors are able to drain their bank account faster than ever before. In addition, the increased use of social media accelerates the spread of bank run information. This article analyzes the policy implications of “faster” bank runs on (i) the optimal delay in bailing out a bank, and consequently (ii) the optimal liquidity reserve requirement. The first one is an ex-post policy decision (after the run begins) whereas the second one is an ex-ante long-term decision.

Keywords: Faster bank runs; Instant money transfers; Bailout delay; Liquidity reserve requirement; Digital banking (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:172:y:2025:i:c:s0014292124002447

DOI: 10.1016/j.euroecorev.2024.104915

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