NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Asaf Manela

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Working Papers and Chapters

November 2012Information Acquisition in Rumor Based Bank Runs
with Zhiguo He: w18513
We study information acquisition and dynamic withdrawal decisions when a spreading rumor exposes a solvent bank to a run. Uncertainty about the bank’s liquidity and potential failure motivates depositors who hear the rumor to acquire additional noisy signals. Depositors with less informative signals may wait before gradually running on the bank, leading to an endogenous aggregate withdrawal speed and bank survival time. Private information acquisition about liquidity can subject solvent-but-illiquid banks to runs, and shorten the survival time of failing banks. Public provision of solvency information can mitigate runs by indirectly crowding-out individual depositors’ effort to acquire liquidity information.

Forthcoming in Journal of Finance

Contact and additional information for this authorAll NBER papers and publicationsNBER Working Papers only

 
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