Electronic Resource
Springer
Journal of financial services research
7 (1993), S. 347-364
ISSN:
1573-0735
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract Resort to bank suspension is generally viewed as an unacceptable means for coping with bank panics, in part because suspension is assumed to involve unacceptably high welfare costs. In Diamond and Dybvig (1983), suspension is costly because it interferes with agents' welfare-maximizing consumption plans. Here a modified version of the Diamond-Dybvig model is used to show how suspension may have only minor welfare costs so long as bank debt is transactable and can serve as a medium of exchange.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01046928
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