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Was Financial Crisis Panic over Institution Runs Justified?

April 10, 2014 in Economics

Throughout history there has been a consistent fear of bank runs, particularly regarding large institutions during times of crisis. The financial crisis of 2007–09 was no exception. The interventions of the authorities in response to these runs, however, raise a number of questions. In a new paper, Vern McKinley considers the facts surrounding each of the runs, and assesses what the various runs induced the authorities to do. “Serious analysis of the risks facing the financial sector was sorely lacking,” concludes McKinley, “and outright misstatement of the facts was evident.”

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