This Paper shows that bank closure policies suffer from a ‘too-many-to-fail’ problem: when the number of bank failures … is large, the regulator finds it ex-post optimal to bail out some or all failed banks, whereas when the number of bank …-ante standpoint. We formalize this time-inconsistency of bank regulation. We also argue that by allowing banks to purchase failed …

bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity and monitors too little. A … central bank can alleviate the liquidity problem, but induces moral hazard. Therefore, we introduce an additional authority … that is able to bail out the bank either by injecting capital at a fixed return or by receiving an equity claim. This …

. Using a model of a systemic bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity … induces moral hazard. Therefore, we introduce a fiscal authority that is able to bail out the bank by injecting capital. This … authority faces a trade-off: when it imposes strict bailout conditions, investment increases but moral hazard ensues. Milder …

In the recent theoretical literature on lending risk, the common pool problem in multi-bank relationships has been … credit-fie information on distressed lending relationships in Germany. In particular, it includes information on bank pools … bank pools increases the probability of workout success and that coordination costs are positively related to pool size. We …

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 …

short-run; leverage requirements reduce default risk but may significantly reduce bank value; mispriced deposit insurance …