5/20/2009 PERMALINK
Computer models of bank runs are identical to those of contagious diseases
An analysis of social networks and minute-by-minute customer transactions during a run on an Indian bank has found that computer models of bank runs spreading through a community are identical to those showing the spread of contagious diseases.



Duke University finance professor Manju Puri and co-author Rajkamal Iyer of the University of Amsterdam assembled a unique data set on the bank run and then employed epidemiological techniques to determine connections between bank depositors The researchers used Google Earth to map the locations of depositor's home addresses. Following the failure of a larger, neighboring bank, the customers of the bank studied, which was fundamentally sound, were withdrawing funds out of a fear that they might not be able to access their money in the future.