crises originating from coordination failures among bank creditors. The second one deals with frictions in credit and …

We propose a simple model of the sovereign-bank diabolic loop, and establish four results. First, the diabolic loop can …

only locally around equilibrium outcomes. Policy is needed because competition deters the socially optimal degree of …-data on the ABS auto loans in the US before and after the policy intervention, and we test, successfully, our theory in this …

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 …

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 …

We develop a model of the joint capital structure decisions of banks and their borrowers. Strikingly high bank leverage … emerges naturally from the interplay between two sets of forces. First, seniority and diversification reduce bank asset … underlie our structural model, we can quantify the impact capital regulation and other government interventions have on bank …

When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If … asset sales occur at depressed prices, then one bank's sales may impact other banks with common exposures, resulting in … explains how the distribution of bank leverage and risk exposures contributes to a form of systemic risk. We compute bank …