Johan de Jong, a Postdoc in the department of Applied Economics at Erasmus School of Economics, talks about the recent turmoil in banking. De Jong works in the fields of behavioural economics, experimental economics, and behavioral finance. He soon hopes to obtain his PhD at the University of Amsterdam on research into bankruns.
After the collapse of US bank Silicon Valley Bank (SVB), things are unsettled in the banking world. As after the credit crisis, banks are receiving large amounts of support from governments and regulators. One example is that account holders' money at SVB is guaranteed. However, it would be better to prevent bank runs, De Jong said. For example, a government or central bank could lend extra money to a bank that is in danger of getting into trouble, averting a possible bank run.
‘The key to preventing a bank run is to spare account holders if a bank gets into trouble. That that costs something the moment a bank fails and that this comes with stricter rules is something we will have to get used to,’ De Jong concluded.
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You can download the full article from NRC Handelsblad, 1 april 2023, above.