We model the impact of bank mergers on loan competition, banks' reserve holdings and aggregate liquidity. Banks compete … in liquidity risk and expected liquidity needs for each bank and for the banking system. Large mergers tend to increase … expected aggregate liquidity needs, and thus the liquidity provision by the central bank. Comparative statics suggest that a …

bank and auction rates in its open market operations in times of financial market stress. In a theoretical model, it is … found that marginal rates at central bank auctions may increase if the share of troubled banks becomes too high relative to … market operations needed to absorb large stress levels in interbank money markets and hence contain central bank auction …

-deposit creditors. Testing the model using EU bank level data yields evidence consistent with the model, suggesting that explicit …

multinational bank. We take a political economy approach to regulation and assume that supervisors maximize the welfare of their own … interests are, the higher is welfare; (3) the bank can allocate its investments strategically across countries to escape closure. …

Using a unique dataset of the Euro area and the U.S. bank lending standards, we find that low (monetary policy) short … securitization activity, weak supervision for bank capital and too low for too long monetary policy rates. Conversely, low long …

signal on bank project quality, short-term wholesale financiers have lower incentives to conduct costly monitoring, and …

This paper examines common regulation as cause of interbank contagion. Studies based on the correlation of bank assets … that banks have a common regulator. In our model, the failure of one bank can undermine the public’s confidence in the … forbearance to the initially failing bank in the hope that it - and hence other vulnerable banks - survives. By contrast, public …