Disruptions in large value payment systems: An experimental approach

Klaus Abbink, Ronald Bosman, Ronald Heijmans and Frans van Winden ()
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Ronald Bosman: De Nederlandsche Bank, Financial Stability Division

No 10-11, Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) from School of Economics, University of East Anglia, Norwich, UK.

Abstract: This experimental study investigates the behaviour of banks in a large value payment system. More specifically, we look at 1) the reactions of banks to disruptions in the payment system, 2) the way in which the history of disruptions affects the behaviour of banks (path dependency) and 3) the effect of more concentration in the payment system (heterogeneous market versus a homogeneous market). The game used in this experiment is a stylized version of a model of Bech and Garrett (2006) in which each bank can choose between paying in the morning (efficient) or in the afternoon (inefficient). The results show that there is significant path dependency in terms of disruption history. Also the level of disruption influences the behaviour of the participants. Once the system has moved to the inefficient equilibrium, it does not easily move back to the efficient equilibrium. Furthermore, there is a clear leadership effect in the heterogeneous market.

Keywords: payment systems; financial stability; experiment; decision making (search for similar items in EconPapers)
JEL-codes: C92 D70 D78 E58 (search for similar items in EconPapers)
Date: 2010-09-01
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Citations: View citations in EconPapers (4)

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Journal Article: Disruptions in Large-Value Payment Systems: An Experimental Approach (2017)
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