In a global game, I show that creditor bailins, when well-designed, can attain the exact same level of bank stability as costly creditor bailouts. This result holds for both risk-averse and risk-neutral creditors. Because bailouts are costly but do not necessarily provide a stability advantage,...

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...

We analyze the question whether and when access to refinancing via repurchase agreements as opposed to asset liquidation increases efficiency to financial intermediators ('banks'). By pledging assets in form of a repo contract the bank can raise cash, by this preventing to forgo returns on sold...