The industrial organization approach to banking is extended to analyze the effects of interbank market activity and regulatory liquidity requirements on bank behavior. A multi-stage decision situation allows for considering the interaction between credit risk and liquidity risk of banks. This...

We analyze how the inflow of liquidity through TARP funds in the wake of the 2007/2008 financial crisis impacted banks' interbank market activity. We show that TARP banks increased interbank market activity statistically and economically in a very significant way. Their interbank lending...

4207 The system of non-bank financial intermediaries (NBFI; i.e., shadow banks) has grown rapidly in recent decades up to a roughly size of about Dollar 71 trillion. Shadow banks moved for a number of reasons into the focus of regulatory authorities: (1) the risks associated with circumventing...