Yes Bank: Journey from sustainable banking to “bank run”

Abstract In a Diamond–Dybvig type model of financial intermediation, we allow depositors to announce at a positive cost to subsequent depositors that they keep their funds deposited in the bank. Theoretically, the mere availability of public announcements (and not its use) ensures that no bank run is the unique equilibrium outcome. Multiple equilibria—including bank run—exist without such public announcements. We test the theoretical results in the lab and find a widespread use of announcements, which we interpret as an attempt to coordinate on the no bank run outcome. Withdrawal rates in general are lower in information sets that contain announcements.

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The threat of outflow of individual deposits in systemically important banks of the Russian Federation: A retrospective analysis and regulatory outlook

Finance and Credit ◽

10.24891/fc.27.1.4 ◽

2021 ◽

Vol 27 (1) ◽

pp. 4-21

Author(s):

Yuliya S. EVLAKHOVA

Keyword(s):

Statistical Analysis ◽

Retrospective Analysis ◽

Russian Federation ◽

Too Big To Fail ◽

Bank Run ◽

Business Operations ◽

The Russian Federation ◽

The Stability ◽

High Threat ◽

Systemically Important Banks

Subject. The article focuses on the dynamics of individual deposits in the Russian systemically important banks as a factor of the stability of available resources. Objectives. I assess the threat of individual deposits outflowing from the Russian too-big-to-fail banks within 2015–2019. I correspondingly outline recommendations for mitigating the threat in the future. Methods. The study is based on methods of logic, comparative and statistical analysis. I devised and applied our own algorithm for classifying too-big-to-fail banks by threat of individual deposit outflow and its level. Results. Systemically important banks were found to have not been exposed to the high threat of bank run within 2015–2019. Three fundamental credit institutions were constantly exposed to the threat of individual deposit outflow. One of eleven systemic banks continuously demonstrated the low threat of individual deposit outflow. The rest of the banks were migrating among the low-threat and high-threat classes. Conclusions and Relevance. The Russian systemically important banks can refer to our findings to articulate their deposit policy, set and use digital accounts of retail customers. The Bank of Russian can rely on the analysis of the threat of individual deposit outflow and other data on financial and business operations of the banks and its sustainability as part of bank oversight procedures.

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A DeFi Bank Run: Iron Finance, IRON Stablecoin, and the Fall of TITAN

SSRN Electronic Journal ◽

10.2139/ssrn.3888089 ◽

2021 ◽

Author(s):

Kanis Saengchote

Keyword(s):

Bank Run

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Biased Decision-Making and Liquidity Buffer in Commercial Banking

Applied Economics and Finance ◽

10.11114/aef.v5i2.2784 ◽

2018 ◽

Vol 5 (2) ◽

pp. 84

Author(s):

Mingyuan Sun

Keyword(s):

Term Structure ◽

Reference Point ◽

Yield Curve ◽

Risk Preference ◽

Framing Effect ◽

Portfolio Allocation ◽

Commercial Banking ◽

Bank Run ◽

Liquidation Cost

Few derived versions based on the classic bank run model have taken into account the framing effect of general lenders. The purpose of this study is to revisit the issue and discuss a model of bank run equilibrium combined with biased risk preference, which is applied to analyze how portfolio allocation and liquidity buffer in commercial banks are affected by liquidation cost and the reference point. The results suggest the condition on which the liquidity buffer of a particular bank should provide. Liquidation cost is positively correlated with the lower bound of liquidity buffer. The effect of the reference point on liquidity buffer partially depends on the slope of yield curve term structure. Higher reference point could typically cause a lower portion of long-term investment.

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