Banks can take costly actions (such as higher capitalization, liquidity holding, and advanced risk management) to fend off runs. While such actions directly affect bank risks, they can also serve as signals of the banks’ fundamentals. A separating equilibrium due to such signaling, however,...

The volume includes theoretical articles on banks' liability restrictions, on the possible causes of the banking crisis and economic-policy recommendations on banking regulation by Hans-Werner Sinn in the past three decades.