Arbeitspapier
Banking Panics and the Lender of Last Resort in a Monetary Economy
This paper studies the role of a lender of last resort (LLR) in a monetary model where a shortage of bank’s monetary reserves (or a banking panic) occurs endogenously. We show that while a discount window policy introduced by the LLR is welfare improving, it reduces the banks’ ex ante incentive to hold reserves, which increases the probability of a panic, and causes moral hazard in asset investments. We also examine the combined effect of other related policies such as a penalty in lending rate, liquidity requirements and constructive ambiguity.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 7451
- Klassifikation
-
Wirtschaft
Money and Interest Rates: General
- Thema
-
monetary equilibrium
banking panic
moral hazard
lender of last resort
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Matsuoka, Tarishi
Watanabe, Makoto
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2019
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Matsuoka, Tarishi
- Watanabe, Makoto
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2019
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