Economics at your fingertips  

Rollover risk and stress test credibility

Ana Elisa Pereira ()

Games and Economic Behavior, 2021, vol. 129, issue C, 370-399

Abstract: This paper studies information disclosure when financial supervisors cannot commit to communicate truthfully. A regulator performs a stress test and chooses whether to disclose bank-specific or aggregate results. Results can be biased at a cost (the higher this cost, the more credible the regulator). Manipulating aggregate information may avoid bank failures, but only if credibility is high enough. Supervisors with little credibility cannot prevent systemic runs by misreporting aggregate information and must release bank-specific reports (truthful or not), triggering partial runs. The results have implications for institutional design: ex ante, a social planner would choose an interior level of credibility.

Keywords: Bank runs; Strategic complementarities; Information disclosure; Information manipulation (search for similar items in EconPapers)
JEL-codes: D82 D83 G01 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
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:

DOI: 10.1016/j.geb.2021.06.006

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-03-31
Handle: RePEc:eee:gamebe:v:129:y:2021:i:c:p:370-399