Sequential decisions in the Diamond–Dybvig banking model

Markus Kinateder and Hubert Janos Kiss

Journal of Financial Stability, 2014, vol. 15, issue C, 149-160

Abstract: We study the Diamond–Dybvig model of financial intermediation (Diamond and Dybvig, 1983) under the assumption that depositors have information about previous decisions. Depositors decide sequentially whether to withdraw their funds or continue holding them in the bank. If depositors observe the history of all previous decisions, we show that there are no bank runs in equilibrium independently of whether the realized type vector selected by nature is of perfect or imperfect information. Our result is robust to several extensions.

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)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Working Paper: Sequential decisions in the Diamond-Dybvig banking model (2013)
Working Paper: Sequential decisions in the Diamond-Dybvig banking model (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:15:y:2014:i:c:p:149-160

DOI: 10.1016/j.jfs.2014.09.004

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