),1 which leads to “fire-sale”–related pecuniaryexternalities; and bank interconnectedness (Allen and Gale2000; Kahn and Santos …

widespread stress, with adverse affects on bank intermediation thereafter. We discuss the bank capital and the bank funding … conclude by discussing the increasing extension of bank credit lines to non-bank financial intermediaries, as well as the role …

this channel, one bank's capital policy affects the equity value and risk of default of other banks. In a model where such … externalities are strong, bank capital takes on the attribute of a public good, where the private equilibrium features excessive … implications of the model with observed bank behavior during the crisis of 2007-09."--Abstract …