The welfare costs of self-fulfilling bank runs

Bibliographic Details
Main Author: Mattana, Elena
Publication Date: 2017
Other Authors: Panetti, Ettore
Format: Article
Language: eng
Source: Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
Download full: http://hdl.handle.net/10400.5/15990
Summary: We study the welfare implications of self-fulfilling bank runs and liquidity require- ments, in a neoclassical growth model where banks, facing long-lasting possible runs, can choose in any period a run-proof asset portfolio. In this framework, runs distort banks’ insurance provision against idiosyncratic liquidity shocks, and liquidity requirements resolve this distortion by forcing a credit tightening. Quantitatively, the welfare costs of self-fulfilling bank runs are equivalent to a constant consumption loss of up to 2.5 percent of U.S. GDP. Depending on fundamentals, liquidity requirements might generate small welfare gains, but also increase the welfare costs by up to 1.8 percent.
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spelling The welfare costs of self-fulfilling bank runsfinancial intermediationbank runsregulationwelfareWe study the welfare implications of self-fulfilling bank runs and liquidity require- ments, in a neoclassical growth model where banks, facing long-lasting possible runs, can choose in any period a run-proof asset portfolio. In this framework, runs distort banks’ insurance provision against idiosyncratic liquidity shocks, and liquidity requirements resolve this distortion by forcing a credit tightening. Quantitatively, the welfare costs of self-fulfilling bank runs are equivalent to a constant consumption loss of up to 2.5 percent of U.S. GDP. Depending on fundamentals, liquidity requirements might generate small welfare gains, but also increase the welfare costs by up to 1.8 percent.ISEG - REM - Research in Economics and MathematicsRepositório da Universidade de LisboaMattana, ElenaPanetti, Ettore2018-09-27T14:41:25Z2017-112017-11-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/15990engMattana, Elena e Ettore Panetti (2017). "The welfare costs of self-fulfilling bank runs". Instituto Superior de Economia e Gestão – REM Working paper nº 017 - 20172184-108Xinfo:eu-repo/semantics/openAccessreponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiainstacron:RCAAP2025-03-17T16:27:11Zoai:repositorio.ulisboa.pt:10400.5/15990Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireinfo@rcaap.ptopendoar:https://opendoar.ac.uk/repository/71602025-05-29T04:15:19.792214Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologiafalse
dc.title.none.fl_str_mv The welfare costs of self-fulfilling bank runs
title The welfare costs of self-fulfilling bank runs
spellingShingle The welfare costs of self-fulfilling bank runs
Mattana, Elena
financial intermediation
bank runs
regulation
welfare
title_short The welfare costs of self-fulfilling bank runs
title_full The welfare costs of self-fulfilling bank runs
title_fullStr The welfare costs of self-fulfilling bank runs
title_full_unstemmed The welfare costs of self-fulfilling bank runs
title_sort The welfare costs of self-fulfilling bank runs
author Mattana, Elena
author_facet Mattana, Elena
Panetti, Ettore
author_role author
author2 Panetti, Ettore
author2_role author
dc.contributor.none.fl_str_mv Repositório da Universidade de Lisboa
dc.contributor.author.fl_str_mv Mattana, Elena
Panetti, Ettore
dc.subject.por.fl_str_mv financial intermediation
bank runs
regulation
welfare
topic financial intermediation
bank runs
regulation
welfare
description We study the welfare implications of self-fulfilling bank runs and liquidity require- ments, in a neoclassical growth model where banks, facing long-lasting possible runs, can choose in any period a run-proof asset portfolio. In this framework, runs distort banks’ insurance provision against idiosyncratic liquidity shocks, and liquidity requirements resolve this distortion by forcing a credit tightening. Quantitatively, the welfare costs of self-fulfilling bank runs are equivalent to a constant consumption loss of up to 2.5 percent of U.S. GDP. Depending on fundamentals, liquidity requirements might generate small welfare gains, but also increase the welfare costs by up to 1.8 percent.
publishDate 2017
dc.date.none.fl_str_mv 2017-11
2017-11-01T00:00:00Z
2018-09-27T14:41:25Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.5/15990
url http://hdl.handle.net/10400.5/15990
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Mattana, Elena e Ettore Panetti (2017). "The welfare costs of self-fulfilling bank runs". Instituto Superior de Economia e Gestão – REM Working paper nº 017 - 2017
2184-108X
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv ISEG - REM - Research in Economics and Mathematics
publisher.none.fl_str_mv ISEG - REM - Research in Economics and Mathematics
dc.source.none.fl_str_mv reponame:Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
instname:FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
instacron:RCAAP
instname_str FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
instacron_str RCAAP
institution RCAAP
reponame_str Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
collection Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
repository.name.fl_str_mv Repositórios Científicos de Acesso Aberto de Portugal (RCAAP) - FCCN, serviços digitais da FCT – Fundação para a Ciência e a Tecnologia
repository.mail.fl_str_mv info@rcaap.pt
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