Capital requirements are the cornerstone of modern bank regulation, yet little is known
about their welfare cost. This paper measures this cost and finds that it is surprisingly large. I …

We study bank capital requirements as a tool to address financial risks and externalities
caused by carbon emissions. Capital regulation can effectively address climate-related …

Financial intermediaries are an important part of the financial system. Intermediaries today
include banks, securitization vehicles, and more generally, shadow banks. They stand …

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 present a tractable dynamic general equilibrium model of self-fulfilling bank runs, where
banks trade capital in competitive and liquid markets but remain vulnerable to runs due to a …

This paper develops a new approach to make welfare assessments based on the notion of
Dynamic Stochastic weights, or DS-weights for short. We leverage DS-weights to …

We analyze the run risk of USD-backed stablecoins. Stablecoin issuers aim to keep the
stablecoin price at $1 by holding a portfolio of US dollar assets like bank deposits …

Liquidity transformation, a key role of banks, is thought to increase fragility, as uninsured
depositors face an incentive to withdraw money before others (a so‐called panic run) …

Deposit insurance designs in many countries place a limit on the coverage of deposits in
each bank. However, no limits are placed on the number of accounts held with different …

The stringency of bank liquidity and capital requirements should depend on their social
costs and benefits. This paper investigates their welfare effects and quantifies their welfare …