We model the impact of interest rates on the liquidity risk of banks. Banks hedge the interest
rate risk of their assets with their deposit franchise: when rates rise the value of their assets …

Stablecoins are at the center of debate surrounding decentralized finance. We develop a
dynamic model to analyze the instability mechanism of stablecoins, the complex incentives …

We develop a theory of banking that explains why banks started out as commodities
warehouses. We show that warehouses become banks because their superior storage …

This paper explores dynamic interactions and connectedness between inflation,
commodities, and economic and monetary policy uncertainty during various market phases …

We study the resolution of global banks by national regulators. Single-point-of-entry (SPOE)
resolution, where loss-absorbing capital is shared across jurisdictions, is efficient but faces …

We develop aq theory of investment with endogenous leverage, payout, hedging, and risk-
taking dynamics. The key frictions are costly equity issuance and incomplete markets. We …

This paper shows that collateralized short-term debt, although privately optimal for reducing
borrowers' risk-taking incentives, can induce fragility (multiple equilibria). Despite sequential …

We explain why banks and nonbank intermediaries coexist in a model based only on
differences in their funding costs. Banks enjoy a low cost of capital due to safety nets and …

This study investigates the functioning of modern payment systems through the lens of
banks' maturity mismatch practices, and it examines the effects of banks' refusal to roll over …

Banks finance lending with deposits and support the operation of payment system by
allowing depositors to freely transfer funds in and out of their deposit accounts. This …