macroeconomic risk, investors reduce direct investment and hold more bank deposits. This ‘flight to quality’ leaves banks flush with … liquidity. Inside banks, given lack of observability of effort, loan officers (or risk takers) are compensated based on the … volume of loans but are penalized if banks suffer a high enough liquidity shortfall. Outside banks, when there is heightened …

The headline numbers appear to show that even as banks and financial intermediaries suffered large credit losses in the …-funded capital injections. However, on closer inspection the composition of bank capital shifted radically from one based on common … banks to lend over this period. We draw conclusions on how capital regulation may be reformed in light of our findings …

behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks …. This way, one bank's dividend payout policy affects the equity value and risk of default of other banks. When such negative …In spite of mounting losses banks continued to pay dividends during the crisis. We present a model that addresses this …

governments “kicked the can down the road” by providing banks with guarantees instead of full-fledged recapitalizations. We adopt … their consequences. We find that forbearance caused undercapitalized banks to shift their assets from loans to risky …, eventually, greater reliance on liquidity support from the European Central Bank …

private sector bank branches in districts with greater exposure to state-owned banks experienced deposit withdrawals and …We analyze the performance of Indian banks during 2007–09 relative to their vulnerability to a crisis measured using … pre-crisis data, in order to study the impact of government guarantees on bank performance during a crisis. Using bank …

Can banks maintain their advantage as liquidity providers when they are heavily exposed to a financial crisis? The … standard argument - that banks can - hinges on deposit inflows that are seeking a safe haven and provide banks with a natural … hedge to fund drawn credit lines and other commitments. We shed new light on this issue by studying the behavior of bank …

suggest that improving bank access to branching affects the sectoral specialization (or diversification) of output, in a …We document that the deregulation of bank branching restrictions in the United States triggered a reallocation across …