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 … crises. We present evidence consistent with these predictions. While interventions to resolve banking crises may be desirable …

in the banking sector, dividend payouts can shift the relative value of stakeholders' claims across firms. Through this … channel, one bank's capital policy affects the equity value and risk of default of other banks. In a model where such … externalities are strong, bank capital takes on the attribute of a public good, where the private equilibrium features excessive …

forfeited if the bank does not meet its capital requirements. This memo underscores the benefits of contingent deferred …

Since the conference version of this report in February 2011, bank stress tests have been almost continuously in the …

The current financial crisis has highlighted the growing importance of the “shadow banking system,” which grew out of … the securitization of assets and the integration of banking with capital market developments. This trend has been most … system, banking and capital market developments are inseparable: Funding conditions are closely tied to fluctuations in the …

-funded capital injections. However, on closer inspection the composition of bank capital shifted radically from one based on common … equity. The dwindling pool of common equity in the banking system may have been one reason for the continued reluctance by … banks to lend over this period. We draw conclusions on how capital regulation may be reformed in light of our findings. …

behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks …. This way, one bank's dividend payout policy affects the equity value and risk of default of other banks. When such negative … externalities are strong and bank franchise values are not too low, the private equilibrium can feature excess dividends relative to …

behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks …. This way, one bank's dividend payout policy affects the equity value and risk of default of other banks. When such negative … externalities are strong and bank franchise values are not too low, the private equilibrium can feature excess dividends relative to …

across banks. In particular, by paying out dividends, a bank transfers value to its shareholders away from its creditors, who … in turn are other banks. This way, one bank's dividend payout policy aects the equity value and risk of default of otther … banks. When such negative externalities are strong and bank franchise values are not too low, the private equilibrium can …

-funded capital injections. However, on closer inspection the composition of bank capital shifted radically from one based on common … equity. The dwindling pool of common equity in the banking system may have been one reason for the continued reluctance by … banks to lend over this period. We draw conclusions on how capital regulation may be reformed in light of our findings. …