Title Reserve requirements, the maturity structure of debt, and bank runs / prepared by Eza Al-Zein

Published Washington, D.C. : International Monetary Fund, 2008 ©2008

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Description 1 online resource (26 pages) Series IMF working paper ; WP/08/108 IMF working paper ; WP/08/108. Contents I. Introduction; II. Motivation and Literature; III. The Model; A. The Domestic Economy; B. Date-Specific and Maturity-Specific Reserve Requirements; C. The Lenders' Problem; D. Defining the Equilibrium; Figures; 1. Structure of the Model; IV. The Emergence of Bank Runs; A. The Emergence of Bank Runs in the Setup Without Reserve Requirements; Defining the Illiquidity Condition; 2. Decision Tree at t=1 Summarizes How a Bank Run Would Occur.; B. Can Reserve Requirements Prevent the Occurrence of a Bank Run?; Illiquidity Conditions with Reserve Requirements Reserve Requirements and Market FailureC. International Lending After the Bank Runs: Are International Lenders "Throwing Good Money After Bad Money"?; International Re-Optimization Problem; V. Discussion; Sunspot and Bank Run Probability; Incentive to Form a Bank; VI. Conclusion; Appendix; References Summary The paper looks at the relationship between reserve requirements and the choice of the maturity structure of external debt in a general equilibrium setup, by incorporating the role of international lenders. A date- and maturity-specific reserve requirement is a fraction of the debt to be deposited in a non-interest bearing account at the central bank. At maturity, the central bank returns the reserves. There exist some specific combinations of date- and maturity-specific reserve requirements that reduce the vulnerability to bank runs. In such setup, lenders may still want to provide new short-term lending to the bank after a bank run Notes Available in PDF, ePUB, and Mobi formats on the Internet Bibliography Includes bibliographical references Subject Bank reserves -- Econometric models Banks and banking, Central -- Econometric models Bank failures -- Econometric models Debts, Public -- Econometric models Bank failures -- Econometric models Bank reserves -- Econometric models Banks and banking, Central -- Econometric models Debts, Public -- Econometric models Form Electronic book Author International Monetary Fund. ISBN 1451914229 9781451914221 1282840622 9781282840621

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