Bank Runs Just Aren’t What They Used to Be

 “Did you know that bank runs – where many savers withdraw money at once – can lead to bank collapse?” the Royal Swedish Academy of Sciences asks visitors to its website. 

The answer is yes.

The Blackstone Real Estate Income Trust has also been able to absorb the impact of outflows. While not a bank, the trust bears similarities by pairing illiquid assets with demand-based funding. 

The rapid growth of such open-ended investment funds has been a cause for concern among policymakers precisely because of this mismatch. 

In October this year, the International Monetary Fund cautioned that “in the face of adverse shocks, OEFs that offer daily redemptions to investors but hold relatively less liquid assets are vulnerable to the risk of investor runs (or large outflows) that could force these funds to sell assets to meet redemptions.”

It’s timely that among all this attention to bank runs, the Nobel Prize for Economic Sciences should have this year been awarded to three economists for their work on them. 

Marc Rubinstein Bloomberg 8 december 2022 

https://www.bloomberg.com/opinion/articles/2022-12-08/bank-runs-just-aren-t-what-they-used-to-be

Economists win Nobel prize for work on bank runs

The Economist 10 October 2022

https://englundmacro.blogspot.com/2022/10/economists-win-nobel-prize-for-work-on.html