Financial Institutions, Financial Contagion, and Financial Crises:

Financial crises are endogenized through corporate and interbank market institutions. Single-bank financing leads to a pooling equilibrium in the interbank market. With private information about one's own solvency, the best illiquid banks will not borrow but rather will liquidate some premature...

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Bibliographic Details
Main Author: Huang, Haizhou (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2000
Series:IMF Working Papers Working Paper No. 00/92
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Summary:Financial crises are endogenized through corporate and interbank market institutions. Single-bank financing leads to a pooling equilibrium in the interbank market. With private information about one's own solvency, the best illiquid banks will not borrow but rather will liquidate some premature assets. The withdrawals of the best banks from the interbank market may lead more solvent but illiquid banks to withdraw from the market, until the interbank market collapses. However, multi-bank financing leads to a separating equilibrium in the interbank market. Thus, bank runs are limited to illiquid and insolvent banks, and idiosyncratic shocks never trigger a contagious bank run
Physical Description:1 Online-Ressource (32 p)
ISBN:1451851588
9781451851588