This paper establishes that partial suspension is an optimal arrangement in an aggregate-risk version of the Diamond-Dybvig (1983) model. The model is a variant of Wallace (1988) in which aggregate risk about the fraction of agents who "want to" consume early is limited to a small group who show...

The article shows that in a finite-trader version of the Diamond and Dybvig model (1983), the ex ante efficient allocation can be implemented as a unique equilibrium. This is so even in the presence of the sequential service constraint, as emphasized by Wallace (1988), whereby the bank must...

During 1870_1913, Canada had a well-diversified branch banking system while banks in the U.S. unit-banking system were less diversified. Canadian banks could issue large-denomination notes with no restrictions on their backing, while all U.S. currency was essentially an obligation of the U.S....