Government guarantees to financial institutions are intended to reduce the likelihood of runs and bank failures, but …-offs based on the global-games literature and its application to bank runs. We derive several results, some of which against … common wisdom. First, guarantees reduce the probability of a run, taking as given the amount of bank risk taking, but lead …

quality of individual banks is opaque but can be inferred by creditors from aggregate signals about bank solvency. When bank …. This information contagion is more likely under clustered asset structures. In contrast, when bank debt is long …

We model the impact of bank mergers on loan competition, reserve holdings and aggregate liquidity. A merger creates an … the interbank market. We assess changes in liquidity needs for each bank and for the banking system as a whole, and relate … liquidity provision in monetary operations by the central bank. Fiercer loan market competition seems to be beneficial for …

-financial firms. In contrast, we find that bank stock prices increase. Cross sectional regressions show that the discretion embedded … in the supervisory control of bank mergers is a major determinant of the positive bank stock returns. This suggests that …