bank failures. The gains from acquiring assets at fire-sale prices make it attractive for banks to hold liquid assets. The … resulting choice of bank liquidity is counter-cyclical, inefficiently low during economic booms but excessively high during … ex post, they affect bank liquidity in subtle ways: Liquidity support to failed banks or unconditional support to …

clears only at fire-sale prices following a large number of bank failures. The gains from acquiring assets at fire …-sale prices make it attractive for banks to hold liquid assets. We show that the resulting choice of bank liquidity is counter … crises may be desirable ex post. However, policies aimed at resolving crises affect ex-ante bank liquidity in subtle ways …

We study a bank run in India in which private bank branches experience sudden and considerable loss of deposits that … on bank- firm relationships and branch balance sheets. The flight to safety is not a flight to quality. Lending shrinks …

clears only at fire-sale prices following a large number of bank failures. The gains from acquiring assets at fire …-sale prices make it attractive for banks to hold liquid assets. We show that the resulting choice of bank liquidity is counter … crises may be desirable ex post. However, policies aimed at resolving crises affect ex-ante bank liquidity in subtle ways …

clears only at fire-sale prices following a large number of bank failures. The gains from acquiring assets at fire …-sale prices make it attractive for banks to hold liquid assets. We show that the resulting choice of bank liquidity is counter … crises may be desirable ex post. However, policies aimed at resolving crises affect ex-ante bank liquidity in subtle ways …

This paper was presented at the Federal Reserve Bank of New York conference on Central Bank Liquidity Tools, February …

Special Issue: Central Bank Liquidity Tools and Perspectives on Regulatory Reform …