constrained efficient when supplemented with the same government liquidity regulation that is required to make a banking system …I revisit the Diamond-Dybvig model of liquidity insurance in the presence of hidden trades. The key result is that in … this environment deposit-taking banks are not necessary for the efficient provision of liquidity. Mutual funds are …

We investigate two competing explanations for commercial bank distress during financial crises: liquidity shortages and … solvency concerns. If liquidity shortages cause distress, a lender of last resort can help by providing funds to banks having … banks with existing solvency problems, then liquidity provision may not spur lending. Our analysis of commercial banks shows …

We investigate liquidity shocks and shocks to fundamentals during financial crises at commercial banks, investment … banks, and hedge funds. Liquidity shock amplification models assume that widespread funding problems cause fire sales. We …

premature to conclude that 'Too Big to Fail" has been solved, but macro-prudential regulation is now much more effective and …

generates bank equity and credit supply volatility. Then, a DSGE model with key financial frictions and a banking sector is … capital regulation, (iii) they mainly operate through their cyclical component, ensuring that long-run dividend payouts remain …

This paper seeks to understand the interplay between banks, bank regulation, sovereign default risk and central bank … in other "safe" countries will impose tighter regulation. As a result, governments in risky countries get to borrow more …

We explore how large and small banks make funding decisions when the government provides system-wide bailouts to the … complements. Overall, the presence of large banks increases aggregate leverage and the magnitude of bailouts. The optimal ex …-ante regulation features size-dependent policies that disproportionally restrict the leverage choices of large banks. A quantitative …

capital in excess of minimum capital requirement regulation. Empirically, banks do not adjust their lending portfolio dollar …