depositor run. We compute similar incentives for the sample of all U.S. banks. Even if only half of uninsured depositors decide … fragility of the US banking system to uninsured depositor runs …

Liquidity risk in banking has been attributed to transactions deposits and their potential to spark runs or panics. We … show instead that transactions deposits help banks hedge liquidity risk from unused loan commitments. Bank stock …. This deposit-lending risk management synergy becomes more powerful during periods of tight liquidity, when nervous …

Diamond-Dybvig [1983] provide a model of intermediation in which bank runs are driven by pessimistic depositor …

The lack of universal deposit insurance coverage can create liquidity risk during financial crises. This aspect of …-ideal environment to identify this competitive liquidity risk during a crisis. We find that banks that operated nearby a post office … effect is strongest for those banks with low reserves, suggesting that the mechanism was through depositor withdrawals rather …

Motivated by the regional bank crisis of 2023, we model the impact of interest rates on the liquidity risk of banks … the bank. The liquidity risk of the bank thus increases with interest rates. We provide a formula for the bank's optimal … simultaneously hedge its interest rate risk and liquidity risk exposures. The dilemma disappears only if uninsured deposits do not …

Both investors and borrowers are concerned about liquidity. Investors desire liquidity because they are uncertain about … when they will want to eliminate their holding of a financial asset. Borrowers are concerned about liquidity because they … compensation for the illiquidity investors will be subject to. We argue that banks can resolve these liquidity problems that arise …

funds act as liquidity providers. Hedge funds using Lehman as prime broker could not trade after the bankruptcy, and these …-connected hedge funds in turn experienced greater declines in market liquidity following the bankruptcy than other stocks; and, the … effect was larger for ex ante illiquid stocks. We conclude that shocks to traders' funding liquidity reduce the market …

We report evidence from the equity market that unused loan commitments expose banks to systematic liquidity risk … as they were needed -- when liquidity demanded by firms taking down funds from commercial paper backup lines of credit … peaked. Our evidence suggests that combining loan commitments with deposits mitigates liquidity risk, and that this deposit …

We show in this paper that bank failures can be contagious. Unlike earlier work where contagion stems from depositor … panics or ex ante contractual links between banks, we argue bank failures can shrink the common pool of liquidity, creating … or exacerbating aggregate liquidity shortages. This could lead to a contagion of failures and a possible total meltdown …