Financial Intermediation and crises

Assignment for Prof. Indraneel Chakraborty’s portion

Due 28th Feb 2021

Please upload the answer on blackboard.

Q1: Give an example (time, details) where we have seen either a run on bank/capital markets, or a coordinated action by market participants to move asset prices away from their fundamental value. Put this in the context of Diamond and Dybvig (1983) and suggest how can we avoid such situations, if it is at all possible. (10 points)