Since 2007, central banks of industrialized countries have counteracted financial instability,
recession, and deflationary risks with unprecedented monetary policy operations. While …

We study a modification of the Diamond and Dybvig (1983) model in which the bank may
hold a liquid asset, some depositors see sunspots that could lead them to run, and all …

We study ex post efficient policy responses to a run on the banking system and the ex ante
incentives these responses create. We show that the efficient response to a run is typically …

This article uses narrative and numerical examples to exposit the ideas in Diamond and
Dybvig (1983) and some recent extensions of their model. Banks create demand deposits to …

We modify the 1983 Diamond and Dybvig model so that banks offer liquidity services to
depositors, raise equity funding, make risky loans, and invest in safe, liquid assets. Banks …

We use experimental methods to investigate what factors contribute to breakdowns in
coordination among a bank's depositors. Subjects in our experiment decide whether to …

We examine the effect of ex-post information contagion on the ex-ante level of systemic risk
defined as the probability of joint bank default. Because of counterparty risk or common …

In this paper I ask whether a central bank policy of providing liquidity to banks during panics
can prevent bank runs without causing moral hazard. This kind of policy has been widely …

Using discriminant analysis, we trace the US bank failures during the period from 2007 to
2010 to poor investment decisions and large exposure to systemic risk channels …

The bulk of cash is held for store of value purposes, with such holdings sharply increasing in
times of high economic uncertainty and only a fraction of the population choosing to hoard …