Is management of risk sharing by banks a cause for bank runs?
South African Journal of Business Management
| Field | Value | |
| Title | Is management of risk sharing by banks a cause for bank runs? | |
| Creator | Abraham, H. | |
| Description | A bank, acting as a central planner under aggregate full certainty, optimizes liquidity allocation by sharing risk between discrete number of depositors. This paper demonstrates the following. (a) It is sufficient to rule out a bank run if all depositors inform the bank their types, patient or impatient, in advance, in a noncommittal manner. There cannot be a bank run because depositors’ strategic behaviour induces the bank to act as a central planner under aggregate full certainty. (b) The impossibility of a bank run is consistent with the price mechanism in partial equilibrium; but it may be inconsistent with the price mechanism in general disequilibrium. (c) The paper concludes that the management of risk sharing by banks is not a cause for bank runs. | |
| Publisher | AOSIS | |
| Date | 2010-03-31 | |
| Identifier | 10.4102/sajbm.v41i1.513 | |
| Source | South African Journal of Business Management; Vol 41, No 1 (2010); 51-55 2078-5976 2078-5585 | |
| Language | eng | |
| Relation |
The following web links (URLs) may trigger a file download or direct you to an alternative webpage to gain access to a publication file format of the published article:
https://sajbm.org/index.php/sajbm/article/view/513/442
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