Does the level of deposits matter for bank fragility and efficiency? In a banking model with endogenous bank runs and a … consumption-saving decision, we show that the level of deposits has opposite effects on bank fragility depending on the nature of … bank runs. In an economy with panic-driven runs, higher deposits make banks less fragile, while the opposite is true when …

of bank failures. We find that riskadjusted premiums reduce moral hazard, enabling the policymaker to increase deposit … insurance coverage by 3 percentage points and decrease the share of expected annual bank failures from 0.66% to 0.16%. The model …

shock caused by a large-bank failure in conjunction with detailed data on interbank exposures. First, we find robust … evidence that higher interbank exposure to the failed bank leads to large deposit withdrawals. Second, the magnitude of …-prudential analysis ; deposit insurance ; interbank market ; wholesale depositors ; bank runs ; banking crisis ; liquidity dry-ups …

endogenous bank fragility and slow recovery from crises. When banks' investment decisions are not contractible, depositors form … expectations about bank risk-taking and demand a return on deposits according to their risk. This creates strategic … of bank net worth and lead to a "gambling trap" with a persistent drop in investment and output. I bring the model to …

This paper studies optimal financial policy in a world where the financial sector can become excessively optimistic. I … decompose the welfare effects of bank capital regulation to demonstrate the effects of exuberance and its interaction with … evidence on the relationship between bank capital and risk-taking. Finally, I investigate the sensitivity of these insights …

This paper studies the long-run evolution of bank risk and its links to the macroeconomy. Using data for 17 advanced … economies, we show that the riskiness of bank assets declined materially between 1870 and 2016. But even though bank assets have … become safer, the losses on these assets are associated with increasingly large output gaps. Before 1945, bank asset returns …