Work detail

Interaction between Macroprudential and Monetary Policies, and Bank Runs

Author: Mgr. Barbora Kolomazníková
Year: 2017 - summer
Leaders: PhDr. Michal Hlaváček Ph.D.
Consultants:
Work type: Finance, Financial Markets and Banking
Masters
Language: English
Pages: 85
Awards and prizes: M.A. with distinction from the Director of IES FSV UK for an extraordinarily good master diploma thesis.
Link:
Abstract: The thesis focuses on the interaction between macroprudential and monetary policies in the presence
of bank runs. In particular, it is examined whether the two policies should be conducted separately or
jointly, and whether the occurence of a bank run affects the result. Furthermore, it is studied how a
bank run impacts the efficiency of the two policies. \\
The baseline results suggest that cooperation between the two policies is less efficient than when they
are determined separately. The reason might be a coordination issue that arises because the same
objective is being assigned to both policies in the cooperative case. On the other hand, when facing a
bank run the cooperative regime achieves a higher degree of financial stability by reducing the
probability of a next run. This is caused by the fact that cooperating authorities choose more aggresive
macroprudential policy when a bank run occurs. A bank run itself does not change the ranking of the
two policy regimes. However, an occurence of a bank run induces higher efficiency of both policies, irrespective of the regime in place. In addition, the policies are more effective when they face financial
shocks, as opposed to a productivity shock

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