Banking Bubbles and Financial Crisis
Jianjun Miao () and
Pengfei Wang ()
No WP2012-010, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics
This paper develops a macroeconomic model with a banking sector in which banks face endogenous borrowing constraints. There is no uncertainty about economic fundamentals. Banking bubbles can emerge through a positive feedback loop mechanism. Changes in household confidence can cause the collapse of bubbles, resulting in a financial crisis. Credit policy can mitigate economic downturns but also incur an efficiency loss. Bank capital requirements can prevent the formation of banking bubbles by limiting leverage. But a too restrictive requirement leads to less lending and hence less production.
Keywords: Banking Bubble; Multiple Equilibria; Financial Crisis; Self-ful?lling Prophecy; Credit Policy; Capital Requirements; Borrowing Constraints (search for similar items in EconPapers)
JEL-codes: E2 E44 G01 G20 (search for similar items in EconPapers)
Pages: 33 pages
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://people.bu.edu/miaoj/bank22.pdf [301 Moved Permanently]--> https://people.bu.edu/miaoj/bank22.pdf)
Journal Article: Banking bubbles and financial crises (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bos:wpaper:wp2012-010
Access Statistics for this paper
More papers in Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Program Coordinator ().