Asset-Side Bank Runs and Liquidity Rationing: A Vicious Cycle

• 成果类型: Article
• 署名作者: Huang, Zongbo
• 署名单位: The Chinese University of Hong Kong, Shenzhen; The Chinese University of Hong Kong, Shenzhen
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.00872
• 发表日期: 2025
• 关键词: Credit lines; liquidity rationing; strategic complementarity; amplification

摘要

I analyze runs on credit lines in an infinite-horizon banking model, focusing on the strategic complementarity between bankers and credit line borrowers. Panic drawdowns by borrowers coupled with bank liquidity rationing can mutually reinforce each other, creating a vicious cycle. Using data from U.S. banks, I estimate the model and quantify the amplification effect arising from strategic complementarity. This amplification effect accounted for two-thirds of the contraction of bank credit during the 2008-2009 crisis. Moreover, I show that policies targeting borrowers have a crowding-in effect and can effectively contain credit contraction.