Banking crises
| Reading: Diamond, D.W., and Dybvig, P.H., 1983, “Bank Runs, Deposit Insurance, and Liquidity”, Journal of Political Economy, 91(3):401-419 |
| Lecture handout: Banking crises* |
Textbook Reading: Chapter 7 (Section 7.3; pp. 216-225)
For an example of a Ponzi scheme that focused on single women, before Charles Ponzi had even been born, listen to:
- Episode 219: A mysterious bank, Criminal
For an inside look at how contagion effects in the tech industry, as well as the (unexamined) role of deposit insurance, see this account of the SVB run:
- Inside a bank run, Planet Money, March 23th 2023
It’s remarkable how that period seemed to pass without a major escalation. Compared to the global financial crisis, the scale of individual bank failures was massive. 
| Learning Objectives: Understand the origins of money. Understand seminal models of bank runs.
Cutting edge theory: Making assessments of digital and crypto currencies. |