banks may default because of fundamental or self-fulfilling runs. With only fundamental defaults, we show that the … competitive equilibrium is constrained efficient. However, when banks are vulnerable to runs, banks' leverage decisions are not ex …-ante optimal: individual banks do not internalize that higher leverage makes other banks more vulnerable. The theory calls for …

-collected historical daily dataset on loans to commercial banks, we analyze how personal connections matter for lending of last resort …, highlighting the importance of governance for this core function of central banks. We show that, when faced with a banking panic in … connected banks - those whose board members were BdF shareholders. The BdF's selective lending policy failed to internalize a …

This study analyzes information production and trading behavior of banks with lending relationships. We combine trade …-by-trade supervisory data and credit-registry data to examine banks' proprietary trading in borrower stocks around a large number of … corporate events. We find that relationship banks build up positive (negative) trading positions in the two weeks before events …

Over the past two decades, banks have increasingly focused on offering contingent credit in the form of credit lines as … a primary means of corporate borrowing. We review the existing body of research regarding the rationales for banks … repay credit lines are put options issued by banks, which are exercised by firms in a correlated manner during periods of …

We ask whether banks use interest rate swaps to hedge the interest rate risk of their assets, primarily loans and … securities. To this end, we use regulatory data on individual swap positions for the largest 250 U.S. banks. We find that the … banks, with some bank swap positions decreasing and some increasing with rates, but aggregating swap positions at the level …