autarky, but also partial and full insurance can obtain, depending on the relative patience of agents and financial … intermediaries. Insurance can be provided because in an equilibrium contract an up-front payment effectively locks in the agent with …

form of monitored liquidity insurance. Bank monitoring and resulting credit line revocations help control illiquidity …We propose and test a theory of corporate liquidity management in which credit lines provided by banks to firms are a … because the cost of monitored liquidity insurance increases with liquidity risk. We exploit a quasi-experiment around the …

. However, a financial institution -- perhaps best viewed as a savings bank -- can provide partial insurance by generating a … the bank faces a tradeoff between provision of insurance and maintenance of private incentives … privately observable, idiosyncratic random events. The information structure precludes conventional insurance arrangements …

We develop a theory of how corporate lending and financial intermediation change based on the fundamentals of the firm …

Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires … that information about the backing assets - loans - not be revealed, so that bank money does not fluctuate in value …-insensitive assets. For the economy as a whole, firms endogenously separate into bank finance and capital market/stock market finance …

market. We show that insurance companies, the largest institutional holders of corporate bonds, reach for yield in choosing … their investments. Consistent with lower rated bonds bearing higher capital requirement, insurance firms' prefer to hold … higher rated bonds. However, conditional on credit ratings, insurance portfolios are systematically biased toward higher …

(relative) decline of mutual savings banks. Among private nondeposit intermediaries, life insurance companies have declined in …