سرایت مالی و نظارت بر سپرده

This paper analyzes market discipline in a many-bank economy where contagion and bank runs interact. We present a model with differently-informed depositors, where those depositors that are more informed have incentives to monitor banks’ investments. It is shown that when banks are undercapitalized, and the probability of success of the risky asset is low, depositors might prefer a contract that is subject to bank runs in the interim period to a contract that allows banks to gamble with their funds and maintain their investment.The results of the paper emphasize the benefits of private monitoring of banks in order to promote market discipline.

The recent financial turmoil has restored the debate concerning deposit insurance schemes. European governments have increased depositors’ protection up to almost 100%, in an attempt to prevent panic bank runs. Nevertheless, this policy was implemented before knowing the real quality of banks’ assets. It is largely claimed that these interventions will intensify the riskiness of banks’ investments and generate bankruptcies and contagion in the future. All these events have called for a system of supervision that prevents institutions from taking on excessive risk. Additionally, they have highlighted that a sound transparency framework based on improved disclosure and high quality accounting standards is essential in order to ensure market confidence and enhance market discipline.

This paper analyzes market discipline in a many-bank economy where contagion and bank runs interact. In particular, we build on the model by Brusco and Castiglionesi (BC), but we modify their framework by introducing the possibility of differently-informed depositors. In BC framework, moral hazard arises due to the existence of undercapitalized banks and no informed depositors. They show that for certain parameter values, depositors prefer a contract that allows banks to gamble with their money to one that restricts banks to be sufficiently capitalized, in order to avoid the moral hazard problem.