bankrupt firm’s main creditor (a bank) to influence the auction outcome. Rules prevent the bank from bidding directly. However …, the bank often finances a bidder in the auction, relaxing liquidity constraints. We show that the optimal bid strategy for … a bank-bidder coalition mimics the monopolist sales price. In the region where the bank’s debt is impaired, this optimal …

-financial firms. In contrast, we find that bank stock prices increase. Cross sectional regressions show that the discretion embedded … in the supervisory control of bank mergers is a major determinant of the positive bank stock returns. This suggests that …

bank monitors borrowers more intensively, rations the amount of credit less frequently and hence may go bankrupt with …

Bank liquidity is a crucial determinant of the severity of banking crises. In this paper, we consider the effect of … welfare question as to when there is too much or too little liquidity on bank balance sheets relative to the socially optimal …

for the efficiency losses that result if financial integration is limited to an integration of the interbank market. …