side of the model. The calibrated model possesses multiple equilibria with bank-run features, suggesting that banks can be … very fragile. We use our model to analyze proposed bank regulations. For example, our results suggest that a capital …

removing barriers to bank entry on bank competition and economic growth. As governments were not concerned about systemic … stability in this period, we are able to isolate the effects of bank competition from those of state implicit guarantees. We … find that the introduction of free banking laws stimulated the creation of new banks and led to more bank failures. Our …