The recent banking turmoil was a stark reminder of the fragility associated with banks' funding structures, especially when they rely on an insufficiently diverse uninsured deposit base. Concerns about unrealised losses, triggered by the rapid shift in monetary policy, played a clear role in the...

We quantify the gains from regulating maturity transformation in a model of banks which finance long-term assets with non-tradable debt. Banks choose the amount and maturity of their debt trading off investors' preference for short maturities with the risk of systemic crises. Pecuniary...

In the presence of deposit insurance, a rise in counterparty risk may cause a freeze in interbank money markets. We show this in a general equilibrium model with regionally-segmented bank-based retail financial markets, in which money markets facilitate the reallocation of funds across banks...