A behavioral model of demandable deposits and its implications for financial regulation
By: Julio J. Rotemberg
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 16620; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16620.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "A model is developed which rationalizes contracts that give depositors the right to obtain funds on demand even when depositors intend to use these funds for consumption in the future.  This is explained by depositor overoptimism regarding their own ability to collect funds in a run.  Capitalized institutions serving depositors with such beliefs emerge in equilibrium even if depositors and bank owners have the same preferences and the same investment opportunities.  Various government regulations of these institutions, including minimum capital levels, requirements concerning the assets they may hold, deposit insurance and compulsory clawbacks in bankruptcy can raise the average ex post welfare of depositors"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 4/5/2011.

Includes bibliographical references.

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Mode of access: World Wide Web.