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- Publisher
- Springer Journals
- Copyright
- 1998 Japanese Economic Association
- ISSN
- 1352-4739
- eISSN
- 1468-5876
- DOI
- 10.1111/1468-5876.00095
- Publisher site
- See Article on Publisher Site
Abstract
Abstract We have constructed a model of bank failure with monetary assets (bonds), adopting the overlapping-generations model. In it, monetary assets play a role in dispersing the credit crunch from a single bank run into a nationwide bank panic. As established by Diamond and Dybvig (1983), a single bank run is explained by a model without any monetary assets. In our model, however, the bond market is introduced to describe the process in which a bank run spreads. As a result, our model describes a general phenomenon—credit market failure—rather than a single bank run.
Journal
The Japanese Economic Review – Springer Journals
Published: Dec 1, 1998
Keywords: economics, general; microeconomics; macroeconomics/monetary economics//financial economics; econometrics; development economics; economic history