NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Lender of Last Resort and the Run on the Savings and Loans

Peter M. Garber

NBER Working Paper No. 823
Issued in December 1981
NBER Program(s):   EFG

Speculative runs on asset price fixing schemes are most often attributed either to an inexplicable mass hysteria or to a sudden, unpredictable random disturbance. Such attribution places runs and panics outside of the realm of scientific inquiry. Alternatively, in this paper I define the notion of a run as a discontinuous shift in portfolio asset holdings brought about by a belief in the end of the price fixing regime. I also argue that runs are foreseeable events and employ the current difficulties of S & L's to serve as an extended example which emphasizes such predictability.

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Document Object Identifier (DOI): 10.3386/w0823

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