IDEAS home Printed from https://ideas.repec.org/a/taf/jeduce/v47y2016i4p317-323.html
   My bibliography  Save this article

A classroom experiment with bank equity, deposit insurance, and bailouts

Author

Listed:
  • Denise Hazlett

Abstract

In this classroom experiment, students see how low bank equity requirements can interact with deposit insurance to encourage excessive risk-taking. The experiment fills a niche Admati and Hellwig (2013) have noted: citizens in a democracy must understand why bank owners argue for low equity requirements and why society as a whole is better off with higher requirements. Instructors can run the experiment in principles of economics courses to introduce the topics of banking and financial crisis, or in advanced courses to promote discussion of financial reform. It takes about 45 minutes to run and debrief, and requires no computerization.

Suggested Citation

  • Denise Hazlett, 2016. "A classroom experiment with bank equity, deposit insurance, and bailouts," The Journal of Economic Education, Taylor & Francis Journals, vol. 47(4), pages 317-323, October.
    • Handle: RePEc:taf:jeduce:v:47:y:2016:i:4:p:317-323
    DOI: 10.1080/00220485.2016.1213678
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00220485.2016.1213678
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00220485.2016.1213678?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Roger B. Myerson, 2014. "Rethinking the Principles of Bank Regulation: A Review of Admati and Hellwig's The Bankers' New Clothes," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 197-210, March.
    2. Dieter Balkenborg & Todd Kaplan & Timothy Miller, 2011. "Teaching Bank Runs with Classroom Experiments," The Journal of Economic Education, Taylor & Francis Journals, vol. 42(3), pages 224-242, July.
    3. Susan K. Laury & Charles A. Holt, 2000. "Classroom Games: Making Money," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 205-213, Spring.
    4. Mary Mathewes Kassis & Denise Hazlett & Jolanda E. Ygosse Battisti, 2012. "A Classroom Experiment on Banking," The Journal of Economic Education, Taylor & Francis Journals, vol. 43(2), pages 200-214, April.
    5. Sarah Pearlman & Robert P. Rebelein, 2013. "A Goldsmith Exercise for Learning Money Creation," The Journal of Economic Education, Taylor & Francis Journals, vol. 44(4), pages 372-388, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jonathan E. Alevy & Paul Ronald Johnson, 2013. "A Classroom Financal Market Experiment," Working Papers 2013-01, University of Alaska Anchorage, Department of Economics.
    2. Adam Hoffer, 2015. "A classroom game to teach the principles of money and banking," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1095448-109, December.
    3. Ogawa, Toshiaki, 2022. "Welfare implications of bank capital requirements under dynamic default decisions," Journal of Economic Dynamics and Control, Elsevier, vol. 138(C).
    4. Chakravarty, Surajeet & Fonseca, Miguel A. & Kaplan, Todd R., 2014. "An experiment on the causes of bank run contagions," European Economic Review, Elsevier, vol. 72(C), pages 39-51.
    5. Sumera Anis & Abdul Rashid, 2017. "Optimal Bank Capital And Impact Of The Mm Theorem: A Study Of The Pakistani Financial Sector," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 12(02), pages 1-21, June.
    6. Tisha L. N. Emerson, 2014. "Anyone? Anyone? A Guide to Submissions on Classroom Experiments," The Journal of Economic Education, Taylor & Francis Journals, vol. 45(2), pages 174-179, June.
    7. Thomas Url, 2020. "Robustes Wachstum der Nicht-Lebensversicherung sichert Privatversicherung 2019 Steigerung der Prämieneinnahmen," WIFO Monatsberichte (monthly reports), WIFO, vol. 93(9), pages 659-671, September.
    8. Toshiaki Ogawa, 2020. "Welfare Implications of Bank Capital Requirements under Dynamic Default Decisions," IMES Discussion Paper Series 20-E-03, Institute for Monetary and Economic Studies, Bank of Japan.
    9. Todd R. Kaplan & Dieter Balkenborg, 2010. "Using Economic Classroom Experiments," International Review of Economic Education, Economics Network, University of Bristol, vol. 9(2), pages 99-106.
    10. Hans Pitlik & Thomas Url, 2020. "Schätzung der Kosten staatlicher Regularien in der österreichischen Versicherungsbranche," WIFO Studies, WIFO, number 65933.
    11. Ms. Deniz O Igan & Thomas Lambert, 2019. "Bank Lobbying: Regulatory Capture and Beyond," IMF Working Papers 2019/171, International Monetary Fund.
    12. Gomes, João F. & Grotteria, Marco & Wachter, Jessica A., 2023. "Foreseen risks," Journal of Economic Theory, Elsevier, vol. 212(C).
    13. Pies, Ingo, 2015. "Die Ordnungsethik plädiert nicht für maßlose Gier, sondern für eine sorgsame Vermeidung intentionalistischer Fehlschlüsse," Discussion Papers 2015-6, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    14. Dina Hosam Gabr & Mona A. ElBannan, 2018. "Consequences of Basel Accords on Bank Risk-Taking and Profitability: Evidence from Asian Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(12), pages 1506-1531, December.
    15. Joseph G. Haubrich, 2020. "A Brief History of Bank Capital Requirements in the United States," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2020(05), pages 1-6, February.
    16. DeAngelo, Harry & Stulz, René M., 2015. "Liquid-claim production, risk management, and bank capital structure: Why high leverage is optimal for banks," Journal of Financial Economics, Elsevier, vol. 116(2), pages 219-236.
    17. Pietro Dindo & Andrea Modena & Loriana Pelizzon, 2019. "Risk Pooling, Leverage, and the Business Cycle," Working Papers 2019: 21, Department of Economics, University of Venice "Ca' Foscari".
    18. Matteo Chinazzi & Stefano Pegoraro & Giorgio Fagiolo, 2015. "Defuse the Bomb: Rewiring Interbank Networks," LEM Papers Series 2015/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    19. A. Arrighetti & A. Lasagni, 2018. "Insegnare Economia Industriale ‘in a digital age’," Economics Department Working Papers 2018-EP06, Department of Economics, Parma University (Italy).
    20. Thomas Url, 2020. "Robust Growth in Non-life Insurance Secures 2019 Premium Growth in Private Insurance," WIFO Bulletin, WIFO, vol. 25(9), pages 75-86, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jeduce:v:47:y:2016:i:4:p:317-323. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/VECE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.