A bank panic is an expectation-driven redemption event that results in a self-fulfilling prophecy of losses on demand … surprisingly di¢ cult to generate bank panic equilibria if one allows for a plausible degree of contractual flexibility. A common … minimum scale requirement. With this simple and empirically-plausible modification to the standard model, we find that bank …

transfers but also for financial sector interventions such as bank recapitalizations and credit guarantees. A nonlinear …% worse in the absence of that response with a cumulative loss of 9.16%. Transfers and bank recapitalizations yielded the … household and bank balance sheets …