Bank runs, bank competition and opacity / by Toni Ahnert and David Martinez-Miera.: FB3-5/2021-30E-PDF
"We model the opacity and deposit rate choices of banks that imperfectly compete for uninsured deposits, are subject to runs, and face a threat of entry. We show how shocks that increase bank competition or bank transparency increase deposit rates, costly withdrawals, and thus bank fragility. Therefore, perfect competition is not socially optimal. We also propose a theory of bank opacity. The cost of opacity is more withdrawals from a solvent bank, lowering bank profits. The benefit of opacity is to deter the entry of a competitor, increasing future bank profits. The excessive opacity of incumbent banks rationalizes transparency regulation"--Abstract, page iii.
Permanent link to this Catalogue record:
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| Department/Agency | Bank of Canada, issuing body. |
|---|---|
| Title | Bank runs, bank competition and opacity / by Toni Ahnert and David Martinez-Miera. |
| Series title | Staff working paper = Document de travail du personnel, 1701-9397 ; 2021-30 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | "Last updated: June 22, 2021." Includes bibliographical references (pages 37-41). |
| Publishing information | Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2021. ©2021 |
| Author / Contributor | Ahnert, Toni, author. |
| Description | 1 online resource (iii, 50 pages) : charts. |
| Catalogue number |
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| Subject terms | Bank failures. Competition. Banques -- Faillites. Compétitivité (Économie) |
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