'Crony capitalism, bail-outs and bank runs

Femminis GianlucaRuggerone Luigi
CEIS Working Papers
We present a simple model where bank runs are possible and we analyse the role of subsidisation of future investment in this setting. We find that such a policy exacerbates the short-run liquidity problem for banks. Moreover, we highlight that a ‘shift in
Number: 124
Date: Friday, January 1, 1999
Revision Date: Friday, January 1, 1999