Evidence abounds on the propagation of financial stresses originating in the US mortgage market to banking systems worldwide through international funding markets. But the transmission of this external funding shock to the real economy via bank lending is surprisingly under-examined, given the...

Evidence abounds on the propagation of financial stresses originating in the US mortgage market to banking systems worldwide through international funding markets. But the transmission of this external funding shock to the real economy via bank lending is surprisingly underexamined, given the...

The paper argues that the incidence of moral hazard played a significant role in the 2007/2008 credit crunch. In particular, bank traders subjected to asymmetric compensation structures have an incentive to take excessive risks even when the bank's shareholders would prefer prudent investment....

In 1866, the largest discount house in London, Overend-Gurney, teetered on the verge of insolvency as a result of extensive loan losses. It appealed to the Bank of England, then a privately held joint-stock bank with a monopoly over note issuance, but the Bank refused to help Overend-Gurney on...

Although historians continue to debate what exactly sparked the Panic of 1825, it is clear that by December of that year, a widespread bank run had erupted, and bankers flocked to the discount window of the Bank of England. While not yet the central bank, the Bank had special legal authority...