. Banks maximize profits, and there are no conflicts of interest between bank shareholders and creditors. The theory explains …

move together as in Adrian and Shin (2010), and iii) intermediaries increase their exposure to systematic risk as they … reduce their idiosyncratic risk through diversification, as in Acharya, Schnabl, and Suarez (2010). Under rational …

, raising credit terms to their borrowers. The picture that emerges from these findings looks less like a traditional bank run …

Existing macroeconomic models focused on bank balance sheet lending are deficient because they do not account for the … investigate two increasingly significant margins of adjustment in credit markets: banks' ability to sell loans and shadow bank … following bank capital shock. Recovery is also faster, because profitable loan sales (e.g., securitization) allow banks to build …

During extreme financial crises, all of a sudden, the financial world that was once rife with profit opportunities for …

how they are resolved. Our analysis sheds new light on the conflict between micro-prudential bank regulation and …

in producing funding liquidity because of their comparative advantage in managing funding liquidity risk. This advantage … stems from the structure of bank balance sheets as well as their access to government-guaranteed deposits and central-bank …

nonfinancial firms. These effects are more pronounced for firms with high default risk and low liquidity and when the aggregate net …

commercial bank assets. We also find that individuals residing in states with higher liberty bond subscription rates were more …

interest of Credit Rating Agencies (CRAs). We model both the CRA conflict of understating credit risk to attract more business … lower. To the extent that in booms the fraction of naive investors is higher, and the reputation risk for CRAs of getting … caught understating credit risk is lower, our model predicts that CRAs are more likely to understate credit risk in booms …