Bank Runs and Institutions: The Perils of Intervention

摘要

We study ex post efficient policy responses to a run on the banking system and the ex ante incentives these responses give to depositors. We focus primarily on system-wide runs, where depositors rush to withdraw their funds from all banks in the economy simultaneously. Argentina experienced such a run in the last two days of November 2001, with total deposits in the banking system falling by more than 2 billion (US) dollars, or nearly 3 percent, on the second day of the run alone. Such runs were a common occurrence in the United States in the late nineteenth and early twentieth centuries and have also occurred in recent times in several developing countries, including Brazil in 1990 and Ecuador in 1999.