, focusing on short-term gains but risking further losses if rates rose. Instead of hedging the market value risk of bank asset … fluctuations. More vulnerable banks were more likely to reclassify. Extending Jiang et al.'s (2023) solvency bank run model, we …

, we conclude that swap positions are not economically significant in hedging the interest rate risk of bank assets … average bank has a large notional amount of swaps-- $434 billion, or more than 10 times assets. But after accounting for the … significant extent to which swap positions offset each other, the average bank has essentially no net interest rate risk from …

regulatory requirements. Our analytic characterization of the bank policy choices shows that imposing solely liquidity … requirements leads to lower bank losses in default at the cost of an increased likelihood of default. Combining liquidity … requirements with leverage requirements reduces drastically both the likelihood of default and the magnitude of bank losses in …

Motivated by the regional bank crisis of 2023, we model the impact of interest rates on the liquidity risk of banks … valuable if depositors remain in the bank. This creates run incentives for uninsured depositors. We show that a run equilibrium … the bank. The liquidity risk of the bank thus increases with interest rates. We provide a formula for the bank's optimal …

. Identification of Business Models -- 5. Bank Business Models and Financial Stability Assessment -- 6. Business Models, Ownership … business models in banking, essential to understanding bank businesses pre- and post- financial crisis and how they evolve in … of risk attached to the bank business models and its contribution to systemic risk throughout the economic cycle. The …