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Huang, Haizhou.

Financial Institutions, Financial Contagion, and Financial Crises Haizhou Huang. [electronic resource] / Haizhou Huang. - Washington, D.C. : International Monetary Fund, 2000. - 1 online resource (32 p.) - IMF Working Papers; Working Paper ; No. 00/92 . - IMF Working Papers; Working Paper ; No. 00/92 .

Financial crises are endogenized through corporate and interbank market institutions. Single-bank financing leads to a pooling equilibrium in the interbank market. With private information about one's own solvency, the best illiquid banks will not borrow but rather will liquidate some premature assets. The withdrawals of the best banks from the interbank market may lead more solvent but illiquid banks to withdraw from the market, until the interbank market collapses. However, multi-bank financing leads to a separating equilibrium in the interbank market. Thus, bank runs are limited to illiquid and insolvent banks, and idiosyncratic shocks never trigger a contagious bank run.

ISBN: 1451851588 : 15.00 USD

ISSN: 1018-5941

Standard No.: 10.5089/9781451851588.001 doi

Subjects--Topical Terms:
Bank Run
Bank Runs
Financial Contagion
Financial Crises
Interbank Market

Subjects--Geographic Terms:
Korea, Republic of
Taiwan Province of China