TY  - JOUR
AU  - Garber,Peter M.
AU  - Grilli,Vittorio U.
TI  - Bank Runs in Open Economies and The International Transmission of Panics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2764
PY  - 1988
Y2  - November 1988
UR  - http://www.nber.org/papers/w2764
L1  - http://www.nber.org/papers/w2764.pdf
N1  - Author contact info:
Peter M. Garber
Deutsche Bank
60 Wall Street
New York, NY 10005
Tel: 212/250-5466
Fax: 212/250-2628
E-Mail: peter.garber@db.com

Vittorio U. Grilli
Ministero di Tesaro
Capo del Servizio T
via XX se tembre 97
Roma 00187 ITALY
Tel: 44/71/631-6407
E-Mail: Vittorio.grilli@tesoro.it
AB  - In this paper, we extend the bank run literature to an open economy model. We show that a foreign banking system, by raising deposit rates in the presence of a domestic banking panic, may generate sufficient liquid resources to acquire assets sold by the domestic banking system at bargain prices. In this case, foreign depositors will benefit from the domestic panic. We also show that our simple model is able to generate the spreading of panics. Perhaps not surprisingly, the crucial element in determining the propagation of financial crises is the effect of interest rates on savings decisions.
ER  -