Formerly Graduate School of Industrial Administration (GSIA)
William Larimer Mellon, Founder
Schenley Park
Pittsburgh, Pennsylvania 15213-3890
United States of America

Pierre Jinghong Liang
Associate Professor of Accounting

Information Objectivity and Accuracy
in a Bank Run Model

Pierre Jinghong Liang

Gaoqing Zhang
Carnegie Mellon University
 

May 2014
 
Downloading the paper
2014-May Draft,
 
Abstract
In this paper, we develop and analyze the roles of two information properties in a simple bank run model. They are objectivity and accuracy of a given information source, originally discussed by an early, influential accounting work by Ijiri and Jaedicke (1966). We operationalize the two properties using a modeling technique from a recent work by Myatt and Wallace (2012) and embed the information source into an otherwise standard model of bank-runs in the spirit of Morris and Shin (2001). We show that the objectivity property plays a distinct and positive role for the economy, exhibiting a comparative advantage in mitigating inefficient, excess bank runs compared with the accuracy property. In fact, it is possible that improving objectivity discourages while improving accuracy encourages such runs..
   
   
   
   

  English Version
Last updated May 31, 2014
send comments to liangj@andrew.cmu.edu 		Chinese Version
Last updated January 6, 2004
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