Leonello, Agnese; Mendicino, Caterina; Panetti, Ettore; … - 2022
consumption-saving decision, we show that the level of deposits has opposite effects on bank fragility depending on the nature of … runs are only driven by fundamentals. The effect of deposits is not internalized by depositors. A saving externality arises …, leading to excessive fragility and insufficient liquidity provision. The economy features under-saving when runs are panic …