adequacy requirements, privately rational but socially inefficient disintermediation, and competitive international de-regulation … global liquidity creation by key central banks and, second, an ex-ante global saving glut, brought about by the entry of a … Tripartite financial stability arrangement between the Treasury the Bank of England and the FSA, weaknesses in the Bank of …

to liquidity assistance as a solution to forbearance. Faced with a bank that chooses capital and liquidity, the … credible, while always bailing out causes moral hazard. In equilibrium, the bank chooses above minimum capital and liquidity … institution providing liquidity assistance can commit to a mixed strategy: never bailing out is too costly and therefore not …

bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity and monitors too little. A … central bank can alleviate the liquidity problem, but induces moral hazard. Therefore, we introduce an additional authority …During the recent financial crisis, central banks have provided liquidity and governments have set up rescue programmes …

Can banks maintain their advantage as liquidity providers when they are heavily exposed to a financial crisis? The … hedge to fund drawn credit lines and other commitments. We shed new light on this issue by studying the behavior of bank … liquidity insurer is not one of the passive recipient, but of an active seeker, of deposits. We find that banks facing a funding …

. Using a model of a systemic bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity … and takes excessive risk compared to the social optimum. A Lender of Last Resort can alleviate the liquidity problem, but …Banking regulation has proven to be inadequate to guard systemic stability in the recent financial crisis. Central …

In August of 2007, banks faced a freeze in funding liquidity from the asset-backed commercial paper (ABCP) market. We … investigate how banks scrambled for liquidity in response to this freeze and its implications for the real economy. Commercial … packages denominated in dollars. The results point to a funding risk in global banking, manifesting as currency shortages for …

The paper studies risk mitigation associated with capital regulation, in a context where banks may choose tail risk … pre-crisis bank behavior, and suggest implications for the optimal design of capital regulation. … assets. We show that this undermines the traditional result that higher capital reduces excess risk-taking driven by limited …

This paper analyses the impact of public disclosure of banks’ risk exposure on banks’ risk taking incentives and its … their loan portfolio, public disclosure reduces the probability of banking crises. When asset risk is driven largely by … exogenous factors beyond the control of bank managers, however, information disclosure may increase banking sector fragility, as …

This paper studies the impact of competition on the determination of interest rates, and on banks’ risk taking … lower entry costs foster competition in deposit rates and reduce banks’ incentives to limit risk exposure. While higher … insurance coverage amplifies this effect, two alternative arrangements (risk based contributions to the deposit insurance fund …

asymmetric information and no excess profits. It captures the possibility of bank runs and business cycle risk; but it ignores …The traditional theory of commercial banking explains maturity transformation and liquidity provision assuming no … the moral hazard problems connected with risk-taking by large banks counting on state bail outs. In this paper market …