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Biased Decision-Making and Liquidity Buffer in Commercial Banking
Applied Economics and Finance
View Archive Info| Field | Value | |
| Title |
Biased Decision-Making and Liquidity Buffer in Commercial Banking
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| Creator |
Sun, Mingyuan
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| Description |
Few derived versions based on the classic bank run model have taken into account the framing effect of general lenders. The purpose of this study is to revisit the issue and discuss a model of bank run equilibrium combined with biased risk preference, which is applied to analyze how portfolio allocation and liquidity buffer in commercial banks are affected by liquidation cost and the reference point. The results suggest the condition on which the liquidity buffer of a particular bank should provide. Liquidation cost is positively correlated with the lower bound of liquidity buffer. The effect of the reference point on liquidity buffer partially depends on the slope of yield curve term structure. Higher reference point could typically cause a lower portion of long-term investment.
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| Publisher |
Redfame Publishing
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| Contributor |
—
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| Date |
2018-01-28
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
http://redfame.com/journal/index.php/aef/article/view/2784
10.11114/aef.v5i2.2784 |
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| Source |
Applied Economics and Finance; Vol 5, No 2 (2018); 84-94
2332-7308 2332-7294 |
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| Language |
eng
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| Relation |
http://redfame.com/journal/index.php/aef/article/view/2784/3136
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| Rights |
Copyright (c) 2018 Applied Economics and Finance
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