An experimental exploration of self-fulfilling banking panics: Their occurrence, persistence, and prevention

Journal of Business

Volumn 79, Issue 4, 2006, Pages 1831-1866

  Madiès, Philippe ^a  

^a UNIV GRENOBLE ALPES   (France)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 33748552351     PISSN: 00219398     EISSN: None     Source Type: Journal    
DOI: 10.1086/503650     Document Type: Article

References (56)

1. Alonso, I. 1996. On avoiding bank runs. Journal of Monetary Economics 37:73-87.
2. Bourgheas, S. 1999. Contagious bank runs. International Review of Economics and Finance 8: 131-46.
3. Bryant, J. 1980. A model of reserves, bank runs, and deposit insurance. Journal of Banking and Finance 4:335-44.
4. Cabrales, A., R. Nagel, and R. Armenier. 2002. Equilibrium selection through incomplete information in coordination games: An experimental study. Mimeo, Universitat Pompeu Fabra, Barcelona.
5. Calomiris, C. 1989. Deposit insurance: Lessons from the record. Federal Reserve Bank of Chicago Economic Perspectives (May-June): 10-30.
6. _. 1990. Is deposit insurance necessary? A historical perspective. Journal of Economic History 50 (June): 283-95.
7. Calomiris, C., and G. Gorton. 1991. The origins of banking panics: Models, facts, and bank regulation. In Financial Markets and Financial Crises, ed. G. Hubbard. Chicago: University of Chicago Press.
8. Carlsson, H., and E. Van Damme. 1993. Global games and equilibrium selection. Econometrica 61:989-1018.
9. Chari, V. V. 1989. Banking without deposit insurance or banking panics: Lessons from a model of the U.S. National Banking System. Federal Reserve Bank of Minneapolis Quarterly Review 13 (Summer): 3-19.
10. Chari, V. V., and R. Jagannathan. 1988. Banking panics, information, and rational expectations equilibrium. Journal of Finance 43:749-60.
11. Chen, Y. 1999. Banking panics: The role of the first-come, first-served rule and information externalities. Journal of Political Economy 107:946-68.
12. Cooper, R. 1999. Experimental evidence and selection. In Coordination games, chap. 1. Cambridge: Cambridge University Press.
13. Cooper, R., D. V. Dejong, R. Forsythe, and T. W. Ross. 1990a. Communication in the battle of the sexes game. Rand Journal of Economics 20:568-87.
14. _. 1990b. Selection criteria in coordination games. American Economic Review 80:218-33.
15. _. 1992. Communication in coordination games. Quarterly Journal of Economics 107:739-71.
16. _. 1993. Forward induction in the battle of the sexes game. American Economic Review 83:1303-16.
17. _. 1994. Alternative institutions for resolving coordination problems: Experimental evidence on forward induction and preplay communication. In Problems of coordination in economic activity, ed. J. W. Frieman. Boston: Kluwer.
18. Cooper, R., and T. Ross. 1998. Bank runs: Liquidity costs and investment distortions. Journal of Monetary Economics 41:27-38.
19. Diamond, D., and P. Dybvig. 1983. Bank runs, liquidity, and deposit insurance. Journal of Political Economy 91:401-19.
20. Engineer, M. 1989. Bank runs and the suspension of deposit convertibility. Journal of Monetary Economics 24:443-54.
21. Flood, R., and N. Marion. 1996. Speculative attacks: Fundamentals and self-fulfilling prophecies. NBER Working Paper no. 5789, National Bureau of Economic Research, Cambridge, MA (October).
22. Garcia, G. 1999. Deposit insurance around the world: Actual and best practices in 1998. International Monetary Fund (IMF) Working Paper no. WP/99/54, IMF, Geneva.
23. Goldfajn, I., and R. O. Valdés. 1997. Capital flows and the twin crises: The role of liquidity. IMF Working Paper no. WP/97/87, IMF, Geneva (July).
24. Goldstein, I.1999. Interdependent banking and currency crises in a model of self-fulfilling beliefs. Mimeo, Tel Aviv University.
25. Goldstein, I., and A. Pauzner. 2005. Demand deposit contracts and the probability of bank runs. Journal of Finance 60:1293-1327.
26. Gorton, G. 1985a. Bank suspension of convertibility. Journal of Monetary Economics 15, no. 2:177-93.
27. _. 1985b. Clearing houses and the origin of central banking in the U.S. Journal of Economic History 45, no. 2:277-83.
28. _. 1988. Banking panics and business cycles. Oxford Economic Papers 40:751-81.
29. Gorton, G., and D. Mullineaux, 1987. The joint production of confidence: Endogenous regulation and 19th century commercial bank clearinghouses. Journal of Money, Credit, and Banking 19, no. 4:458-68.
30. Green, E., and P. Lin. 2000. Diamond and Dybvig's classical theory of financial intermediation: What's missing? Federal Reserve Bank of Minneapolis Quarterly Review 24:3-13.
31. Grossman, R. 1992. Deposit insurance, regulation, and moral hazard in the thrift industry: Evidence from the 1930s. American Economic Review 82 (September): 800-21.
32. Hazlett, D. 1997. Deposit insurance and regulation in a Diamond-Dybvig banking model with a risky technology. Economic Theory 9, no. 3:453-70.
33. Heinemann, F. 2000. Unique equilibrium in a model of self-fulfilling currency attacks: Comment. American Economic Review 90:316-18.
34. Heinemann, F., and G. Illing. 1999. Speculative attacks: Unique equilibrium and transparency. Working Paper no. 97, Frankfurter Volkswirtschaftliche Diskussionsbeitrage, Goethe-University, Frankfurt.
35. Heinemann, F., R. Nagel, and P. Ockenfels. 2004. The theory of global games on text: Experimental analysis of coordination games with public and private information. Econometrica 72:1583-99.
36. Hoag, C. 2004. Reserve drains on interest-paying banks before financial crises. Unpublished manuscript, Division of Humanities and Social Sciences, California Institute of Technology, Pasadena.
37. Jacklin, C., and S. Bhattacharya. 1988. Distinguishing panics and information-based bank runs: Welfare and policy implications. Journal of Political Economy 96, no. 3:568-92.
38. Jeanne, O. 1997. Are currency crises self-fulfilling? A test. Journal of International Economics 43:263-86.
39. Kagel, H., and A. Roth, eds. 1995. The Handbook of Experimental Economics. Princeton, NJ: Princeton University Press.
40. Krugman, P. 1979. A model of balance of payments crisis. Journal of Money, Credit, and Banking 11:311-25.
41. Kumbhakar, S., and D. Wheelock. 1995. Which banks choose deposit insurance? Evidence of adverse selection and moral hazard in a voluntary insurance system. Journal of Money, Credit, and Banking 25, no. 1:186-201.
42. Lindgren, C., G. Gillian, and M. Saal. 1996. Bank soundness and macroeconomic policy. Washington, DC: IMF.
43. Morris, S., and H. Song Shin. 1998. Unique equilibrium in a model of self-fulfilling currency attacks. American Economic Review 88:587-97.
44. Obstfeld, M. 1986. Rational and self-fulfilling balance of payments crises. American Economic Review 76:72-81.
45. _. 1996. Models of currency crisis with self-fulfilling features. European Economic Review 40:1037-47.
46. Ochs, J. 1995. Coordination problems. In Kagel and Roth, The Handbook of Experimental Economics.
47. Peck, J., and K. Shell. 2003. Equilibrium bank runs. Journal of Political Economy 111:103-23.
48. Selgin, G. 1993. In defense of bank suspension. Journal of Financial Services Research 7:347-64.
49. Schotter A., and T. Yorulmazer. 2003. On the severity of bank runs: An experimental study. Working paper, Department of Economics, New York University.
50. Siegel, S., and N. Castellan. 1988. Nonparametric statistics for the behavioral sciences, 2nd ed. New York: McGraw-Hill.
51. Sprague, O. 1910. A history of crises under the National Banking System. Washington, DC: U.S. Government Printing Office.
52. Temzelides, T. 1997. Evolution, coordination, and banking panics. Journal of Monetary Economics 40:163-83.
53. Van Huyck, J., R. Battalio, and R. Beil. 1990. Tacit coordination games, strategic uncertainty, and coordination failure. American Economic Review 80:234-48.
54. _. 1991. Strategic uncertainty, equilibrium selection principles, and coordination failure in average opinion games. Quarterly Journal of Economics 106:885-910.
55. Wallace, N. 1988. Another attempt to explain an illiquid banking system: The Diamond and Dybvig model with sequential service taken seriously. Federal Reserve Bank of Minneapolis Quarterly Review 12 (Fall): 3-16.
56. _. 1990. A Banking model in which partial suspension is best. Federal Reserve Bank of Minneapolis Quarterly Review 14 (Autumn): 11-23.