This paper studies the incentives of large, sophisticated creditors to withdraw funds during a run on a systemically important financial institution—specifically the famous run on Continental Illinois in 1984. Surprisingly, we find that creditors with relatively liquid balance sheets initially withdrew more than other creditors. As time went on, institutions with relative large exposures were more likely to withdraw, despite government support which included a broad guarantee of all creditors. These findings have important implications for the design of facilities to resolve systemically important institutions in the future.

Abstract We study the aftermath of the 1968 Washington, D.C. civil disturbance to illuminate the mechanisms that drive urban redevelopment in the presence of low demand and racial tension. Using a within-block identification strategy, we show that destruction caused lots to remain vacant for the next thirty years and only recently converge in terms of structure value. The city acted to preclude for-profit land owners from leaving land vacant until demand conditions improved by purchasing nearly half of all properties in damaged neighborhoods. Despite this and other steps, the city had limited success in speeding up redevelopment.