capital-constrained banks, a ""credit crunch"". This paper develops a bank model to study credit crunches and their real …Periods of banking distress are often followed by sizable and long-lasting contractions in bank credit. They may be … effects. In this model, banks maintain a precautionary level of capital that serves as a smoothing mechanism to avert …

interventions aimed at alleviating the bank capital crunch. We find that the growth of firms dependent on external financing is … disproportionately positively affected by bank recapitalization policies, and that this effect is quantitatively important and robust to …

This paper develops a model to assess how monetary policy rates affect bank risk-taking. In the model, a reduction in … bank extracts from borrowers. Under limited liability, this increased profitability affects only upside returns, inducing … the bank to take excessive leverage and hence risk. Excessive risk-taking increases as the interest rate decreases. At a …