This paper studies the relationship between liquidity demand risk, deposit diversification and insurance in 12 countries during the period 2005-2014. We capture liquidity risk by focusing on the unfunded loan commitments. We find that higher diversification in the deposit base can reduce the...

The Deposit Guarantee Directive enlarges the role of DGSs in supporting and financing with alternative interventions, the early research of “market solutions” that may avoid the failure of a bank. Despite the broad mandate formally set out in the Directive, the feasibility of the failure...

Does the level of deposits matter for bank fragility and efficiency? In a banking model with endogenous bank runs and a consumption-saving decision, we show that the level of deposits has opposite effects on bank fragility depending on the nature of bank runs. In an economy with panic-driven...

In emerging countries, deposits play an important role in banks' total funding; hence depositor discipline may impact significantly banking performance and the financial system's stability. My paper investigates the reaction of bank depositors to interest rates as well as signs of banks' risk,...

In emerging countries, deposits play an important role in banks’ total funding; hence, depositor discipline may significantly impact banking performance and financial system stability. This paper investigates depositor discipline before and after the 2008-2011 banking crisis in Vietnam. The...

A bank panic is an expectation-driven redemption event that results in a self-fulfilling prophecy of losses on demand deposits. From the standpoint of theory in the tradition of Diamond and Dybvig (1983) and Green and Lin (2003), it is surprisingly di¢ cult to generate bank panic equilibria if...

A bank panic is an expectation-driven redemption event that results in a self-fulfilling prophecy of losses on demand deposits. From the standpoint of theory in the tradition of Diamond and Dybvig (1983) and Green and Lin (2003), it is surprisingly di¢ cult to generate bank panic equilibria if...

The recent financial crisis has significantly modified the approach to helping troubled banks. The traditional role of the central bank has shifted toward non-credit forms of assistance, provided mainly by the state, and even toward assisting insolvent banks. State assistance - directly or...

Short-term debt is commonly used to fund illiquid assets. A conventional view asserts that such arrangements are run-prone in part because redemptions must be processed on a first-come, first-served basis. This sequential service protocol, however, appears absent in the wholesale banking...

Short-term debt is commonly used to fund illiquid assets. A conventional view asserts that such arrangements are run-prone in part because redemptions must be processed on a first-come, first-served basis. This sequential service protocol, however, appears absent in the wholesale banking...