Sunspot bank runs in competitive versus monopolistic banking systems

This paper extends the Diamond and Dybvig (1983) model to compare two banking economies: one with 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 system dominates the set in the monopolistic one.

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Year of publication:	2013
Authors:	Matsuoka, Tarishi
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 118.2013, 2, p. 247-249
Publisher:	Elsevier
Subject:	Bank runs \| Competitive banks \| Monopolistic bank

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Type of publication:	Article
Classification:	G21 - Banks; Other Depository Institutions; Mortgages ; E44 - Financial Markets and the Macroeconomy
Source:	RePEc - Research Papers in Economics

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