Consider a competitive bank whose illiquid asset portfolio is funded by short-term debt that has to be refinanced … of social externalities of bank failures further lowers the optimal level of transparency. Moreover, asset risk taking …

It is known that sunspots can trigger panic-based bank runs and that the optimal banking contract can tolerate panic …. Depositors observe different, but correlated, signals on the stability of the bank. I find that if the signals that depositors …, either a full bank run, or a partial bank run, or non bank run occurs depending on the realization of the signals. Computed …

. It is shown that in such a dynamic framework with common uncertainty the precision of the additional signal plays a …