Banking panics linked to business cycle, central bank intervention improves welfare.
Banking panics happen when people think banks won't make much money. A study shows that these panics are linked to the economy and not just random events. When people rush to take out their money from banks, it can actually be a good thing because it helps share risks and lets banks invest better. But if these panics cost too much or if risky investments are involved, the government can step in to make things better for everyone.