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Cycles And Banking Crisis

Lazopoulos, I (2005) Cycles And Banking Crisis Keele Working Papers in Economics.

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Abstract

We extend Diamond and Dybvig's (1983)[11] model to a dynamic context where we study how the bank's financial stability is a®ected by successive withdrawal shocks during a crisis. We model a crisis as a series of these unanticipated events over a long period of time and not as isolated bank runs. We highlight the importance of banks' portfo- lio liquidity in surviving such crisis. The paper shows that external borrowing can smooth investment returns to guarantee that solvent but illiquid intermediaries can survive a crisis. In the presence of borrowing restrictions banks' liquidity exhibits an erratic behaviour.

Item Type: Article
Authors :
NameEmailORCID
Lazopoulos, Ii.lazopoulos@surrey.ac.ukUNSPECIFIED
Date : 1 February 2005
Uncontrolled Keywords : Cycles, Banking crisis
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:12
Last Modified : 17 May 2017 14:32
URI: http://epubs.surrey.ac.uk/id/eprint/818027

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