1887

n Studies in Economics and Econometrics - Financial fragility : an assessment

Volume 33, Issue 2
  • ISSN : 0379-6205

Abstract

The literature on bank runs and financial fragility suggests that banks may overcome the problem of incomplete markets by acting as central planners which pool all their customers' deposits, and thereby transform an uncertain environment to one of no aggregate uncertainty. This leads to the possibility of bank runs where a large group of depositors may decide to withdraw their deposits from the bank for fear that others may do the same. It is argued in this paper that despite being able to pool all customers' deposits, the most a bank can do is transform an environment of incomplete markets to one of complete markets where uncertainty still prevails. This has monetary implications.

Loading full text...

Full text loading...

Loading

Article metrics loading...

/content/bersee/33/2/EJC21486
2009-01-01
2019-10-20

This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error