Sunspot bank runs in competitive versus monopolistic banking systems

  • Tarishi Matsuoka
  • Published 2015

Abstract

This paper extends theDiamond andDybvig (1983)model to compare two banking economies: onewith a competitive banking system and another with a monopolistic one. It is shown that a competitive banking system is more fragile than a monopolistic one in the sense that the parameter set stipulating that a bank run equilibrium exists in the competitive banking… (More)

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