While this idea is compelling, both economic research and the events of the financial crisis suggest that it is incomplete. In their classic paper on bank runs, Douglas Diamond and Philip Dybvig showed how rational and prudent actions by individual depositors to limit their own risks may be highly destabilizing to an institution designed to transform short-term liabilities into long-term assets.
8 Xavier Freixas, Bruno Parigi, and Jean-Charles Rochet show that a similar kind of collective action problem can arise in a network akin to a modern check-clearing system in which credit extensions among banks allow claims on one institution to be fulfilled by another.