We examine banking regulation in a macroeconomic model of bank runs. We construct a general equilibrium model where …-ante optimal: individual banks do not internalize that higher leverage makes other banks more vulnerable. The theory calls for …

We provide evidence that credit lines offer liquidity insurance to borrowers. Borrowers are able to extensively use … credit rating downgrades and credit line cuts, suggesting substantial liquidity access before credit line cuts. Credit line … to draw down. Building on this evidence, we develop a model where syndicates faced with liquidity shocks continue to …

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 …

simple model where, even ignoring interconnectedness issues, the failure of a bank causes a larger welfare loss than the … failure of other institutions. The reason is that agents in need of liquidity tend to concentrate their holdings in banks …. Thus, a shock to banks disproportionately affects the agents who need liquidity the most, reducing aggregate demand and the …

Because of secrecy, little is known about the political economy of central bank lending. Utilizing a novel, hand … November 1930, the Banque de France (BdF) lent selectively rather than broadly, providing substantially more liquidity to … unprecedented government bailout of the central bank, and resulted in loss of shareholder control over the central bank …

We trace the origins of China's rapidly developing shadow banking sector to the adoption of stricter liquidity rules by …

We study time-consistent bank resolution mechanisms. When interventions are ex post efficient, a government cannot …

Why do governments bailout banking systems in distress? We argue that the government can efficiently provide liquidity …. The market price of the projects or securities sold depends on the supply of liquidity, which is determined in general … equilibrium. The supply of liquidity is not perfectly elastic so asset prices can deviate from efficient market' prices, that is …