This paper empirically examines how capital affects a bank's performance (survival and market share), and how this effect varies across banking crises, market crises, and normal times that occurred in the U.S. over the past quarter century. We have two main results. First, capital helps small...

How well does monetary policy affect bank behavior, particularly during financial crises? What is the role of banks in creating asset bubbles that burst and lead to crises? We address these issues by focusing on bank liquidity creation, a comprehensive measure of bank output that accounts for...