We model how monetary policy shocks affect the lending behavior of small and large banks. Other things being equal, small banks are riskier than large banks since the latter are more likely to be bailed out. Thus, small banks face a higher cost of non-deposit financing and are unable to finance...

Because of limited liability, insolvent banks have an incentive to continue lending to insolvent borrowers, in order to hide losses and gamble for resurrection, even though this is socially inefficient. We suggest a scheme that regulators could use to solve this problem. The scheme would induce...

In leveraged loan deals, lead banks use bookbuilding to extract pricerelevant information from syndicate participants. This paper examines the content of such information. We find that pricing adjustments during bookbuilding are highly informative, not only about investors' required risk premium...