Bank runs and Agent Based Modeling

Purpose and goal

The goal of this project was to contribute with increased knowledge on how savers´ actions in a bank crisis can result in a bank run. The results increase our understanding of how savers perceive risk in a bank crisis. Such understanding is relevant in communication with savers in order to decrease risk perception and prevent bank runs. The results also point to the relevance of financial literacy to savers´ actions.

Results and expected effects

The results indicate that savers´ risk perception in a bank crisis has similarities to risk perception in a natural disaster. Thus, risk perception can be described as a health risk as appose to a financial risk. The results also point to the relevance of financial literacy to savers actions. Financial literacy commonly refers to for example ability to calculate compounded interests. Our results imply a relevance to broaden the concept of financial literacy and that educational programs targeting households need to be bespoke according to their purpose.

Approach and implementation

Data has been collected through two survey investigations. In the first a survey was distributed to Cypriote citizen during the bank crisis in 2013. In the second a survey was distributed to Swedish mutual fund savers. Data has been analyzed with different statistical methods.