Money runs

• 成果类型: Article
• 署名作者: Donaldson, Jason Roderick; Piacentino, Giorgia
• 署名单位: Washington University (WUSTL); Columbia University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2021.11.007
• 发表日期: 2022
• 页码: 35-57
• 关键词: Banking; security design; Private money; financial fragility; Suspension of convertibility

摘要

In this paper, we develop a model that links the funding role of bank debt in the primary market to its circulation in the secondary market. We uncover a new rationale for why banks do what they do. Banks choose to fund themselves with demandable debt because it commands a high price, even though doing so exposes them to money runs resulting from its failure to circulate. In the model, banks endogenously perform the essential functions of real-world banks: they transform liquidity, transform maturity, pool assets, and have dispersed depositors. We show novel effects of suspension of convertibility. (C) 2021 Elsevier B.V. All rights reserved.