Dd (1983) Bank Run Model Of The Deposit Contract Design Thought

Douglas W.Diamond and Philip H.Dybvig established a classical model about the bank runs in their paper"Bank Runs,Deposit Insurance,and Liquidity"(1983)( Abbreviated as DD(1983) in the follows). This paper gives an explicit analysis of the demand for liquidity and the"transformation"service provided by banks. Since the model was proposed, some scholars developed this model by analyzing the assumptions of the initial model deeply, some scholars put this model in a dynamic circumstance studying the questions about the banking interest rates or the banking crisis characters, others used this model to study the relative banking and economy questions. For example, Neil Wallace(1988)analyzes the"sequential service constraint"of DD(1983) model deeply; Edward J.Green and Ping Lin(2000)establishes a finite-trader version of the DD(1983) and the conclusion is there exists another possible contract besides the demand deposit contract in the DD(1983) model ; Itay Goldstein and Ady Pauzner add a possibility to the return R and study the optimal interest rates which bank pays to the depositors; Jiawing Qi(1994) puts the DD model in a dynamic economy and point out when the model is repeated the"suspension of convertibility"policy in the initial model is void; Theodosios Temzelides(1994)also uses the repeated version of the DD(1983) model and gets such conclusions: when the size of banks decreases the probability of bank panics increases and a bank run first spread among banks in the same geographic location and then there is a contagion effects throughout the entire population; Roberto Chang and Andres Velasco (1998) use the DD (1983) framework to study the exchange rate regime in an open economy and the financial crises in the emerging markets, such as the 1997 Asian Financial Crises.This thesis will study this classical model from the deposit contract designing angle. Through the literature above, we can see this is a brand-new angle. There are three aspects in the model which reflect the deposit contract designing philosophy: the appropriate interest rate...