In an endowment economy, we analyze coexistence and competition between traditional fiat money (Dollar) and cryptocurrency (Bitcoin). Agents can trade consumption goods in either currency or hold on to currency for speculative purposes. A central bank ensures a Dollar inflation target, while...

This paper analyzes a regulator's optimal strategic delay of resolving banks when a resolution causes inefficiencies. The regulator observes depositors' withdrawals at the bank level and needs to decide on how many withdrawals to tolerate before intervening to impose a mandatory stay. The...

This paper demonstrates that the Modigliani Miller Theorem on capital structure does in general not apply to banks when faced with endogenous liquidity risk in form of bank runs and asset illiquidity. The Modigliani Miller Theorem states that under certain assumptions, firms with different...