the hierarchy. The analysis identifies two types of effects of policy choice: a direct effect of the policy on bank … behaviour and an indirect effect on firm behaviour as a reaction to the bank response. Both effects are important determinants …

This paper focuses on bank rescue packages and on the behaviour of troubled banks in light of rescue offers. A puzzling … feature of experience with banking crises is that in many cases policy authorities make offers of bank rescue, and banks are … reluctant to accept these offers. We study situations in which regulators have decided to offer bank rescue plans, and we show …

As the number of bank failures increases, the set of assets available for acquisition by the surviving banks enlarges … for liquidation of banking assets. At a sufficiently large number of bank failures, and in turn, at a sufficiently low … and allowing the regulator to price-discriminate against outsiders in the market for bank sales. …

temporary increases in market concentration after a bank failure, by promoting a takeover of failed banks by a solvent …

, and thus are typically bank dependent, also perform relatively worse during banking crises. The differential effects …

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 …