how capital regulation, liquidity regulation, deposit insurance, loan to value limits, and dividend taxes interact to … offset these frictions. We compare agents welfare in the decentralized equilibrium absent regulation with welfare in … equilibria that prevail with various regulations that are optimally chosen. In general, regulation can lead to Pareto …

was to ensure that liquidity provisions could be disseminated efficiently even when the unsecured interbank markets were … banks that pledged asset-backed securities as collateral for these loans. The data and analysis illustrate the major role … that foreign - in particular, European - banks currently play in the U.S. financial system and the resultant currency …

crisis. I consider two different motives for outside investors and their interaction with banks trading asset … larger the market share of distressed core banks, while a run becomes less likely instead as a result in the adverse …

uncertainty as Knightian. We show that when aggregate liquidity is low, an increase in uncertainty leads agents to a series of … protective actions -- decreasing risk exposures, hoarding liquidity, locking-up capital -- that reflect a flight to quality …

which banks abstain from lending to operating firms with good projects because of their self-fulfilling expectations that … other banks will not be making such loans. Our model enables us to study the effectiveness of alternative measures for …, infusion of capital into banks, direct lending to operating firms by the government, and the provision of government capital or …

Rather than charging direct fees, banks often charge implicitly for their services via interest spreads. As a result … of banks argue that compensation for bearing systematic risk is not part of bank output. We apply these models and find …

Financial systems are inherently fragile because of the very function which makes them valuable: liquidity … transformation. Regulatory reforms can strengthen the financial system and decrease the risk of liquidity crises, but they cannot … between monetary policy and liquidity transformation 'optimal' monetary policy would consist of a modified Taylor rule in …