Governance by depositors, bank runs and ambiguity aversion
RESEARCH IN INTERNATIONAL BUSINESS AND FINANCE
Authors: Guillemin, Francois
Abstract
We investigate the theoretical relationship between ambiguity aversion and the decision to withdraw early from a deposit contract. We first document and define the concepts to illustrate our results. Then we extend the theoretical framework of Gorton (1985) to implement a model of maxmin expected utility to match the ambiguity aversion hypothesis. We observe that the most ambiguous depositors are more likely to mistakenly withdraw their deposits, reducing bank stability and leading to inefficient bank runs. We also show higher ambiguity levels negatively impact bank equity levels.
Changes in water fluxes partition related to the replacement of native dry forests by crops in the Dry Chaco
JOURNAL OF ARID ENVIRONMENTS
Authors: Rodriguez, Paula; Gimenez, Raul; Nosetto, Marcelo D.; Jobbagy, Esteban G.; Magliano, Patricio N.
Abstract
Land-use change has been the strongest driver of vegetation cover change in the world. In the South American Dry Chaco (similar to 1 M km(2); PPT/ET0 < 0.65), native dry forests are experiencing high deforestation rates that tend to continue in the coming years. Here, we used a hydrological model (Hydrus 1-D) to analyze changes in the water balance triggered by the replacement of dry forests by annual rainfed summer crops. We found that transpiration represented the main water vapour flux in both vegetation covers (59 and 48% of annual rainfall in dry forest and cropland, respectively), followed by evaporation (31 and 30%, respectively) and interception (11 and 9%, respectively). Runoff was five times higher in the cropland compared to the dry forest (10 vs. 2%; p < 0.01). Deep drainage was a negligible water flux in dry forests but it represented 4% of annual rainfall in croplands (p < 0.01), reaching values of zero and 130 mm year(-1) for dry and wet years, respectively. Our results highlight the key role of vegetation cover controlling ecosystem water fluxes in the Dry Chaco. More generally, we suggest that the expansion of dryland cultivation can modify the regional water balance and threaten the primary production of ecosystems in the long run.