Discussion paper

DP16581 Learning in Bank Runs

We examine a model in which depositor learning exacerbates bank runs. Informed depositors can quickly withdraw when the bank has low-quality assets. Uninformed depositors may decide to wait, which allows them to learn by observing informed depositors' actions. However, learning that the bank has low-quality assets will spark a run ex-post, which increases the incentives of uninformed depositors to run ex-ante. Moreover, when there are more informed depositors, uninformed depositors have a fear of missing out, which also makes preemptive runs more likely. Learning may, thus, increase the likelihood of panic runs and decrease surplus.


Schliephake, E and J Shapiro (2021), ‘DP16581 Learning in Bank Runs‘, CEPR Discussion Paper No. 16581. CEPR Press, Paris & London. https://cepr.org/publications/dp16581