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Only Paul Could Go To Changchun

Panic Bank Runs

6/11/2017

 
Here.

We provide experimental evidence that panic bank runs occur in the absence of problems with fundamentals and coordination failures among depositors, the two main culprits identified in the literature. Depositors withdraw when they observe that others do so, even when theoretically they should not. Our findings suggest that panic also manifests itself in the beliefs of depositors, who overestimate the probability that a bank run is underway. Lossaversion has a predictive power on panic behavior, while risk or ambiguity aversion do not. 

From:

Hubert János Kiss  
Eötvös Loránd University

Ismael Rodriguez-Lara  
Middlesex University

Alfonso Rosa-Garcia
Universidad Catolica de Murcia



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