We investigate the trade-off between the risk-sharing gains enjoyed by more interconnected firms and the costs … resulting from an increased risk exposure. We find that when the shock distribution displays “fat” tails, extreme segmentation …

We examine to what extent banks’ stock market values during the 2007-2012 financial crisis were driven by increases in … the default risk of banks designated as globally systemically important by the Financial Stability Board. We find that … bank market values hardly respond to changes in the default risk of individual systemic banks. Together, however, changes …

We develop a model where banks invest in reserves and loans, and face aggregate liquidity shocks. Banks with liquidity … financial stability. The structure of liquidity shocks affects the severity and the occurrence of crises, as well as the amount …

conditions under which regulatory measures, such as capital and liquidity regulation, increase welfare. …

We study a model of network formation and start-up financing with endogenous entrepreneurial type distribution. A hub … firm admits members to its network based on signals about entrepreneurs’ types. Network membership is observable, which … allows lenders to offer different interest rates to network and stand-alone entrepreneurs. We show that a network outcome can …