On run-preventing contract design

Yoshihiro Ohashi

    Research output: Contribution to journalArticle

    1 Citation (Scopus)

    Abstract

    This study considers how to implement an efficient allocation of a financial intermediation model, including liquidation costs. The main result shows that there is a mechanism such that, for any liquidation cost, an efficient allocation is implementable in strictly dominant strategies. There is no need for third-party assistance, such as deposit insurance. In addition, the mechanism is tolerant of a small, unexpected shock caused by premature withdrawals.

    Original languageEnglish
    Pages (from-to)63-72
    Number of pages10
    JournalB.E. Journal of Theoretical Economics
    Volume15
    Issue number1
    DOIs
    Publication statusPublished - 2014 Dec 1

    Fingerprint

    Efficient allocation
    Liquidation costs
    Contract design
    Financial intermediation
    Deposit insurance
    Dominant strategy

    Keywords

    • bank runs
    • Deposit contracts
    • implementation
    • mechanism design
    • strategy-proof

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

    Cite this

    On run-preventing contract design. / Ohashi, Yoshihiro.

    In: B.E. Journal of Theoretical Economics, Vol. 15, No. 1, 01.12.2014, p. 63-72.

    Research output: Contribution to journalArticle

    Ohashi, Yoshihiro. / On run-preventing contract design. In: B.E. Journal of Theoretical Economics. 2014 ; Vol. 15, No. 1. pp. 63-72.
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