We consider bank panic models in which, depending on the configuration of fundamentals, there can be a positive probability of a bank panic. A crucial assumption in these models is that new equity cannot enter in a panic. We quantify the importance of this assumption by computing the minimal...

Corporate credit lines are drawn more heavily when funding markets are more stressed. This covariance elevates expected bank funding costs. We show that credit supply is dampened by the associated debt-overhang cost to bank shareholders. Until 2022, this impact was reduced by linking the...

Research on the political and social impacts of financial crises has focused chiefly on free market economies, hindering our understanding of their effects in other settings. We exploit an episode of a financial crisis that hit the Israeli kibbutzim to study its impact in a socialist context....

Do periods of persistently loose monetary policy increase financial fragility and the likelihood of a financial crisis? This is a central question for policymakers, yet the literature does not provide systematic empirical evidence about this link at the aggregate level. In this paper we fill...

This paper introduces an endogenous network of payments chains into a business cycle model. Agents order production in bilateral relations. Some payments are executed immediately. Other payments, chained payments, are delayed until other payments are executed. Because production starts only...

This paper uses the severe economic crisis in Turkey in 2008 as a quasi-experiment to evaluate the impact of worsening economic conditions during pregnancy on birth outcomes. Exploiting the temporal and spatial variations in economic hardship across provinces, we show that the deep economic...

We examine the desirability of granting "safe harbor" provisions to creditors of financial intermediaries in sale-and-repurchase (repo) contracts. Exemption from an automatic stay in bankruptcy enables financial intermediaries to raise greater liquidity and induces entry of intermediaries with...

The rise of shadow banking and attendant financial fragility in China can be traced to intensified deposit competition following the global financial crisis (GFC). Deposit competition intensified after the GFC because the GFC slowed down banks' deposit growth from cross-border money inflows and...

Advanced economies borrowed substantially during the Covid recession to fund their fiscal policy. The Covid recession differed from the Great Recession in that sovereign debt markets remained calm and spreads barely responded. We study the experience of Greece, the most extreme manifestation of...