This paper studies the strategic interaction between a bank whose deposits are randomly withdrawn, and a lender of last … resort (LLR) that bases its decision on supervisory information on the quality of the bank’s assets. The bank is subject to a …. Moreover, when the LLR does not charge penalty rates, the bank chooses the same level of risk and a smaller liquidity buffer …

exogenous factors beyond the control of bank managers, however, information disclosure may increase banking sector fragility, as …

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 …

How damaging is competition between bank regulators? This paper models regulators that compete because they want to … interactions. The sensitivity of regulatory standards to bank moral hazard, adverse selection, liquidity risk and the degree of … regulatory bias is investigated. A calibration suggests that regulatory reform can halve bank default rates. The paper also shows …

efficient’. While Central Bank policy may have shifted radically now that stability is an explicit objective of policy, the same …

Today’s regulatory rules, especially the easily-manipulated measures of regulatory capital, have led to costly bank … failures. We design a robust regulatory system such that (i) bank losses are credibly borne by the private sector (ii …) systemically important institutions cannot collapse suddenly; (iii) bank investment is counter-cyclical; and (iv) regulatory …

guarantees, and provision of unrestricted liquidity support. In the context of a simple model of information-based bank runs … any of these policies leads to a reduction in the interest rate of uninsured deposits and in the bank’s incentives to take …

This Paper investigates the determinants of the takeover of a foreign bank by a domestic bank whereby the former … becomes a branch of the latter. Each bank is initially supervised by a national agency that cares about closure costs and … deposit insurance payouts, and may decide the early closure of the bank on the basis of supervisory information. Under the …