An experimental examination of interbank markets

Preventing (panic) bank runs

“…In all our specifications, we control for age, gender, risk aversion, and cognitive abilities. There exists experimental evidence that participants who experience more bank runs during the experiment might behave differently than those who observe fewer bank runs (see, among others, Garratt and Keister (2009), Kiss et al (2014a), Peia and Vranceanu (2019) or Davis et al (2019b)). To account for this possibility, we include a dummy variable (Observed bank run) that takes the value 1 if the subject witnessed a bank run in the previous round.…”