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

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    Keywords

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

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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