their investors. We show the bank has to have a fragile capital structure, subject to bank runs, in order to perform these … functions. Far from being an aberration to be regulated away, the funding of illiquid loans by a bank with volatile demand … such as narrow banking and bank capital requirements …

policy is non-targeted. The ex post benefits from a monetary bailout accrue in proportion to the number amount of leverage … bailout instruments is endogenous and characterize the structure of optimal bailouts …

information analysis, this paper outlines what signals a central bank might look for to determine if a financial crisis is …

recession caused by other forces. Based on a VAR and new data on the sources of bank failures in the 1930s from Richardson (2007 …), we find that illiquidity shocks played a key role in explaining the bank failures during the Friedman and Schwartz …

macroprudential tax revenue in a bailout fund used for stimulus measures is undesirable …

We study a modification of the Diamond and Dybvig (1983) model in which the bank may hold a liquid asset, some … depositors see sunspots that could lead them to run, and all depositors have incomplete information about the bank's ability to … survive a run. The incomplete information means that the bank is not automatically incentivized to always hold enough liquid …

repayments (default). Firms in Italy defaulted more against banks with high levels of past losses. We control for borrower … fundamentals with firm-quarter fixed effects; thus, identification comes from a firm's choice to default against one bank versus … bank relationships comes into doubt …