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CEIS - Centre for International Studies on Economic Growth >
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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2108/137
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| Title: | Crony capitalism, bail-outs and bank runs |
| Authors: | Femminis, Gianluca
Ruggerone, Luigi |
| Issue Date: | 1999 |
| Publisher: | CEIS |
| Series/Report no.: | Quaderni CEIS; 124 |
| Abstract: | We present a simple model where bank runs are possible and we analyse the role of subsidisation of future investment in this setting. We find that such a policy exacerbates the short-run liquidity problem for banks. Moreover, we highlight that a "shift in expectations" about the keeping of the subsidisation promises induces itself a bank run. We show how a bank recapitalisation may help solving the problem; in fact, it can make credible an "ex post" recovery of the banking system, thus preventing the shift in expectation from generating a self-fulfilling bank crisis. |
| URI: | http://hdl.handle.net/2108/137 |
| Appears in Collections: | Quaderni
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| 124.pdf | | 144Kb | Adobe PDF | View/Open |
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