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 … externalities are strong and bank franchise values are not too low, the private equilibrium can feature excess dividends relative to …

-funded capital injections. However, on closer inspection the composition of bank capital shifted radically from one based on common …

We study whether a central bank should deviate from its objective of price stability to promote financial stability. We … financial crises. We compare several interest rate rules, under which the central bank responds more or less forcefully to … central bank can both reduce the probability of a crisis and increase welfare by departing from strict inflation targeting and …

central bank of tracking of the flexible price equilibrium values of the natural levels of output and the real interest rate …