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Journal des Économistes et des Études Humaines

Editor-in-Chief: Garello, Pierre

Ed. by Gentier, Antoine

CiteScore 2018: 0.14

SCImago Journal Rank (SJR) 2018: 0.107
Source Normalized Impact per Paper (SNIP) 2018: 0.013

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Volume 20, Issue 1


Volume 17 (2011)

Volume 16 (2010)

Volume 15 (2009)

Contagious Bank Failures in a Free Banking System: A Persistent Misunderstanding

Mathieu Bédard
  • Corresponding author
  • Faculté d’économie et de gestion, Aix-Marseille Université, Aix-en-Provence, France Toulouse School of Economics, Université Toulouse 1 Capitole, Toulouse, France
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Published Online: 2014-06-04 | DOI: https://doi.org/10.1515/jeeh-2014-0005


A recurring citation in systemic risk literature reviews (P. Aghion, P. Bolton, and M. Dewatripont. 2000. “Contagious Bank Failures in a Free Banking System.” European Economic Review 44:713–18) offers a model where what they describe as a free banking system is vulnerable to contagious bank runs through clearinghouse loans. The paper ignores key contributions to both free banking and financial history literature, such that the paper is of little relevance to the understanding of the stability of both free banking systems and clearinghouse arrangements. Our criticism concentrates on the institutions of banking absent or misrepresented. It is argued that their conclusions are inapplicable to free banking.

Keywords: financial stability; bank runs; systemic risk; clearinghouses; free banking


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About the article

Published Online: 2014-06-04

Published in Print: 2014-07-01

Citation Information: Journal des Économistes et des Études Humaines, Volume 20, Issue 1, Pages 71–78, ISSN (Online) 2153-1552, ISSN (Print) 2194-5799, DOI: https://doi.org/10.1515/jeeh-2014-0005.

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©2014 by Walter de Gruyter Berlin / Boston.Get Permission

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