guarantees, and provision of unrestricted liquidity support. In the context of a simple model of information-based bank runs … any of these policies leads to a reduction in the interest rate of uninsured deposits and in the bank’s incentives to take …

This paper studies the strategic interaction between a bank whose deposits are randomly withdrawn, and a lender of last … resort (LLR) that bases its decision on supervisory information on the quality of the bank’s assets. The bank is subject to a …. Moreover, when the LLR does not charge penalty rates, the bank chooses the same level of risk and a smaller liquidity buffer …

We analyse the implications for the pricing of bank loans of the reform of capital regulation known as Basel II. We …-sensitive standardized approach of Basel II. We also show that only an extremely high social cost of bank failure might justify the proposed …

This Paper investigates the determinants of the takeover of a foreign bank by a domestic bank whereby the former … becomes a branch of the latter. Each bank is initially supervised by a national agency that cares about closure costs and … deposit insurance payouts, and may decide the early closure of the bank on the basis of supervisory information. Under the …

account, a U-shaped relationship between competition and the risk of bank failure generally obtains. …

capital. Capital serves to ameliorate a moral hazard problem in the choice of risk. There is a fixed aggregate supply of bank … social welfare function that incorporates a social cost of bank failure. We consider the effect of a negative shock to the … supply of bank capital and show that optimal capital requirements should be lowered. Failure to do so would keep banks safer …

costs of bank failure. We also show that for high values of this cost, Basel III points in the right direction, with higher …