Managing confidence in emerging market bank runs /

Managing confidence in emerging market bank runs /

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Bibliographic Details
Author / Creator:	Kim, Se-jik, 1960-
Imprint:	[Washington, D.C.] : International Monetary Fund, European Dept., and Research Dept., 2004.
Description:	1 online resource (28 pages)
Language:	English
Series:	IMF working paper ; WP/04/235 IMF working paper ; WP/04/235.
Subject:	Bank failures -- Developing countries -- Econometric models. Liquidity (Economics) -- Econometric models. Bank liquidity -- Developing countries -- Econometric models. Bank failures -- Econometric models Liquidity (Economics) -- Econometric models Developing countries
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/12495468

Hidden Bibliographic Details
Other authors / contributors:	Mody, Ashoka. International Monetary Fund. European Department. International Monetary Fund. Research Department.
ISBN:	1462345611 9781462345618 1452799466 9781452799469 128356128X 9781283561280 9786613873736 661387373X 1451920288 9781451920284
Digital file characteristics:	text file
Notes:	Includes bibliographical references (pages 27-28). Electronic reproduction. [Place of publication not identified] : HathiTrust Digital Library, 2010. Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 English. digitized 2010 HathiTrust Digital Library committed to preserve Print version record.
Summary:	In a rational-expectations framework, we model depositors' confidence as a function of the probability of future bank bailouts. We analyze the effect of alternative bank bailout policies on depositors' confidence in an emerging market setting, where liquidity shortages of banks are revealed sequentially and governments cannot credibly commit to bailing out all potentially distressed banks. Our findings suggest that allowing early bank failures and using available liquidity for credible commitments to later bailouts can better boost confidence than early bailouts. This conclusion arises because with a high chance of liquidity shortage in the future, depositors may lose confidence and hence withdraw deposits even from potentially sound banks. Such a policy of late bailouts is likely to receive political support when a full bailout needs to be financed by taxation. The logic of late bailout remains valid even when banks may hide their distress or when closures of early distressed banks create contagion.
Other form:	Print version: Kim, Se-Jik, 1960- Managing confidence in emerging market bank runs. [Washington, D.C.] : International Monetary Fund, ©2004

Description
Summary:	In a rational-expectations framework, we model depositors'' confidence as a function of the probability of future bank bailouts. We analyze the effect of alternative bank bailout policies on depositors'' confidence in an emerging market setting, where liquidity shortages of banks are revealed sequentially and governments cannot credibly commit to bailing out all potentially distressed banks. Our findings suggest that allowing early bank failures and using available liquidity for credible commitments to later bailouts can better boost confidence than early bailouts. This conclusion arises because with a high chance of liquidity shortage in the future, depositors may lose confidence and hence withdraw deposits even from potentially sound banks. Such a policy of late bailouts is likely to receive political support when a full bailout needs to be financed by taxation. The logic of late bailout remains valid even when banks may hide their distress or when closures of early distressed banks create contagion.
Physical Description:	1 online resource (28 pages)
Format:	Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002.
Bibliography:	Includes bibliographical references (pages 27-28).
ISBN:	1462345611 9781462345618 1452799466 9781452799469 128356128X 9781283561280 9786613873736 661387373X 1451920288 9781451920284