This paper studies Reverse Asset Substitution (RAS), an agency problem in which banks place investment and borrowing … provides a constrained optimal lending solution to ensure banks can lend to firms despite this limited commitment problem …. Under RAS, the restrictions imposed by banks commit the firms to having a prolonged lending relationship. RAS reduces a firm …

. 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 …

The crisis demonstrated that microprudential regulation focusing on the risks taken by individual banks is not …

Banks are intrinsically fragile because of their role as liquidity providers. This results in under-provision of … liquidity. We analyze the effect 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 affected by the amount …

of Central and Eastern European (CEE) countries. Using a panel dataset of more than 400 banks for the period from 1994 to … indirect evidence of the benefits of banking sector diversification according to the criterion of parent banks' country of …