the monetary policy and financial regulation and supervision perspectives. In the preceding SUERF Study (2013/2), the …

to liquidity assistance as a solution to forbearance. Faced with a bank that chooses capital and liquidity, the … institution providing liquidity assistance can commit to a mixed strategy: never bailing out is too costly and therefore not … credible, while always bailing out causes moral hazard. In equilibrium, the bank chooses above minimum capital and liquidity …

makers can correct incentive distortions through effective regulation and supervision, then allowing intervention is always … optimal. If regulation is imperfect and the risk-sharing benefit from intervention is absent, in contrast, it is optimal to …

liquidity to the bank-in-resolution. Creating such a pre-pack solution should form the core of the resolution plans that … be met for a bank to be resolvable, the “safe-to-fail” test and the banking structures required in order to meet this …

Central banks (CBs) in Europe and the US have been providing virtually unlimited amounts of liquidity to banks for … justified? I present a model in which a commercial bank, subject to idiosyncratic liquidity shocks, faces uncertainty about … chooses higher liquidity reserves in equilibrium. Furthermore, increasing bank capital and penalty rates make it easier to …

ABSTRACT:The classic Diamond-Dybvig model of banking assumes perfect competition and abstracts from issues ofmoral … hazard. To reflect conditions prevailing in UK banking, however, we incorporate market powerand risk-taking by banks with … effectiveness of bank franchise value in checkingrisk-taking may be undermined by the prospect of bailouts; and how bail …