In the last decades, international financial integration has markedly increased. This paper analyses the impact of these developments on banks' common exposure to shocks and on banking sector systemic risk. Theoretically, this impact is ambiguous. Empirically, we find that banks' common exposure...

This paper shows that transparency in banking can be harmful from a social planner's point of view. According to our model, enhancing transparency above a certain level may lead to the inefficient liquidation of a bank. The reason lies in the nature of a standard deposit contract: its payoff...