Diamond and Dybvig and the Panic of 1907
George Selgin
My last post argued that, despite what Diamond and Dybvig's famous theory suggests, bank runs have seldom proven fatal to otherwise sound banks. Instead, when people run on a bank, it's usually because it's already in hot water.
In response to that post, a Twitter correspondent wondered whether the Panic of 1907—the proximate cause of the reform efforts culminating in the Fed's establishment—was an exception to my claim, and therefore evidence of the inherent vulnerability of fractional reserve banking. Читать дальше...
