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Contagious bank failures in a free banking system

Aghion,P.
; 
Bolton,P.
; 
Dewatripont,M.
Abstract
This paper develops a model of an unregulated banking system based around a private clearing house arrangement. Whilst such a system may dominate one with a public safety net in reducing moral hazard in lending and therefore the scope for individual bank insolvency, it also increases the likelihood of contagious bank failures following a systemic shock or an aggregate liquidity shortage.
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Pagination: 6
Date
2000
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Tilburg University Research Output Collection
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Keywords
SDG 10 - Reduced Inequalities
Citation
Aghion, P, Bolton, P & Dewatripont, M 2000, 'Contagious bank failures in a free banking system', European Economic Review, vol. 44, no. 4-6, pp. 713-718.
URI
https://hdl.handle.net/20.500.14602/38000
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