Banks are intrinsically fragile because of their role as liquidity providers. This results in under-provision of … liquidity. We analyze the e¤ect of government guarantees on the interconnection between banks' liquidity creation and likelihood … of runs in a model of global games, where banks.and depositors' behavior are endogenous and a¤ected by the amount and …

. Specifically, banks originating from a country that has lower level of trust tend to have lower interbank borrowing. Using a … the network structure of interbank markets. Core banks acting as interbank intermediaries in the network are more …