, while the distortion costs are to a large extent fixed. This insight has important consequences. First, banks choose to …

commit not to inject capital into the banking system. Contrary to common wisdom, we show that the government may still avoid … moral hazard and implement the first best allocation by using the distribution of bailouts across banks to provide ex ante … banks and resolve the worst performing ones, including through mergers. Our mechanism continues to perform well if banks are …

We develop a model of banking industry dynamics to study the quantitative impact of capital requirements on equilibrium … where big banks with market power interact with small, competitive fringe banks. Banks face idiosyncratic funding shocks in … out of endogenous entry and exit, as well as banks' buffer stock of net worth. We show the model predictions are …

compensation for the illiquidity investors will be subject to. We argue that banks can resolve these liquidity problems that arise … in direct lending. Banks enable depositors to withdraw at low cost, as well as buffer firms from the liquidity needs of … such as narrow banking and bank capital requirements …

. More supervisory resources are spent on larger, more complex, and riskier banks. However, hours increase less than … reallocation of supervisory hours at times of stress and in the post-2008 enhanced supervisory framework for large banks, providing …

We explore the actions of financially distressed banks in two distinct periods that include financial crises (1985 … widespread belief that distressed banks gamble for resurrection, we document that distressed banks take actions to reduce … forces beyond formal regulations incentivize bank managers to deleverage when their banks are in distress …

" banking outcomes. Although railroads improved economic conditions along their routes, we offer evidence of another channel …. Specifically, railroads facilitated better information flows about banks that led to modifications in bank asset composition …

banking system during the liberalization process. Argentina suffered some fallout from the Mexican tequila crisis of 1995, but … its response to that crisis (allowing weak banks to close) and the redoubling of regulatory efforts to promote market … discipline after the crisis made Argentina's banking system quite resilient during the Asian, Russian, and Brazilian crises …