One of the feats that earned Douglas Diamond and Philip Dybvig the 2022 Nobel Prize in Economics (joint with Ben Bernanke) is a model of bank runs and related financial crises. In an article published in 1983, they noted that, in 1930s America, people would cash in their savings as soon as rumors about a bank’s financial health started to spread, lest the bank go bust and they lose their money. Such bank runs, though, were the reason why many, otherwise healthy banks collapsed in those years. Government-guaranteed deposit insurance, the Nobel laureates concluded, is the best solution to this problem.
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Source: Phys.org