Lessons for rescuing a SIFI: The Banque de France’s 1889 ‘lifeboat’

Pierre-Cyrille Hautcoeur, Angelo Riva, Eugene N. White, 2 July 2014

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In the aftermath of the 2008 financial crisis, the Dodd-Frank Act of 2010 set out to limit the authority of the Federal Reserve to rescue insolvent financial institutions.

Topics: Economic history, Financial markets
Tags: bailout, bank runs, Banque de France, central banking, Central Banks, financial crises, lender of last resort, moral hazard, SIFIs

Exploring the transmission channels of contagious bank runs

Martin Brown, Stefan Trautmann, Razvan Vlahu, 10 April 2014

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Financial contagion – the situation in which liquidity or insolvency risk is transmitted from one financial institution to another – is viewed by policymakers and academics as a key source of systemic risk in the banking sector.

Topics: Financial markets
Tags: bank runs, banking, banks, contagion, experimental economics, financial crisis, financial stability, global crisis, systemic risk

Theories of financial crises

Itay Goldstein, Assaf Razin, 11 March 2013

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Financial and monetary systems are designed to improve the efficiency of real activity and resource allocation. A large empirical literature in financial economics provides evidence connecting financial development to economic growth and efficiency (Levine 1997, Rajan and Zingales 1998).

Topics: Global crisis, Global economy, International finance
Tags: bank runs, Banking crisis, credit frictions, Currency crises, market freezes

Borrower runs: Behavioural motives and their policy implications

Stefan Trautmann, Razvan Vlahu, 28 August 2011

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The typical bank run is a “lender run”; lenders and/or depositors take back their money in fear of the bank going bankrupt – and in doing so, make their fears come true. But there is another type of bank run – a “borrower run”.

Topics: Global crisis, International finance
Tags: bank runs, Behavioural economics, borrower runs, strategic default

Deposit insurance without commitment: Wall Street vs. Main Street

Russell Cooper, Hubert Kempf, 18 February 2011

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The events which followed the subprime crisis, which started in August 2007, were shocking news to many economists. Bank runs were back!

Topics: Financial markets, Global crisis, International finance
Tags: bank runs, financial regulation, moral hazard

Contagion through interbank markets

José-Luis Peydró, Rajkamal Iyer, 25 April 2010

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How important are financial linkages in transmitting shocks across the financial system? How vulnerable is the financial system to contagion due to its high-degree of financial connections? What are the factors that mitigate the extent of contagion?

Topics: Global crisis, International finance
Tags: bank runs, financial regulation, global crisis, India

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