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Abstract

In absence of bank risk-taking behavior, opacity is defined as the inability of depositors, speculators and central banker to disentangle default risk and asset-s return from the asset-s value. We show the conditions under which opacity leads to runs on a solvent bank in equilibrium and uncertainty on fundamental values of the asset. The main repercussion of the opacity is, however, on the central bank-s policy response which is inefficient during a banking crisis.



Item Type: MPRA Paper -

Original Title: Opacity of Banks and Runs with Solvency-

Language: English-

Keywords: Opacity, Bank Runs, Central Bank Intervention, Cash-in-Market Pricing.-

Subjects: G - Financial Economics > G1 - General Financial MarketsE - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and CreditE - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy CoordinationG - Financial Economics > G0 - General > G01 - Financial CrisesG - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages-





Autor: D-Avino, Carmela

Fuente: https://mpra.ub.uni-muenchen.de/24166/







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