Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212044 
Year of Publication: 
2006
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 19/2006
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper demonstrates that, even if depositors are fully rational and always choose the Pareto dominant equilibrium when there are multiple equilibria, a bank run may still occur when depositors' expectations of the bank's fundamentals do not change.More specifically, a bank run may occur when depositors learn that noisy bank-specific information is revealed, or when they learn that precise bank-specific information is not revealed.The results in this paper are consistent with empirical evidence about bank runs. It also implies that suspension of convertibility can improve the efficiency of bank runs.
Subjects: 
bank run
banking panic
suspension of convertibility
JEL: 
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
952-462-302-1
Document Type: 
Working Paper

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