Three essays in banking system with incomplete information

The bank does not have incomplete information about the quality of its investment. The essays apply screening and signaling games to study how the bank screens out the quality of the entrepreneur's loan and prevents bank runs.;The first essay proposes that the bank's punishment policies to the failed entrepreneur determine the entrepreneur's willingness to pay a higher required payment. A severe punishment policy causes the entrepreneur with a bad-quality project exits the credit market. However, a soft punishment policy makes the entrepreneur with a bad quality project have more incentive to choose a large-size loan and the bank is unable to distinguish the quality of its investment.;The second essay assumes that the bank uses depositors' deposits to finance the entrepreneur's project. If depositors anticipate that the entrepreneur fails to pay the required payment, and then the bank is unable to obtain the return of its investment, many depositors rush to withdraw their deposits. Depositors do not have perfect information about the quality of the bank's investment. Therefore, a bank run may occur at the bank with a good-quality investment. This essay studies how the bank, entrepreneur, and depositors apply a coordination scheme to prevent inefficient bank runs. The condition of bank runs shows the bank's service rule affects the probability of bank runs.;The third essay demonstrates that a panic-based bank run is a rational expectations equilibrium. In a rational expectations model, the uninformed late consumers' confidence about the bank determines whether a bank run occur or not. This essay also compares the characteristics of bank runs as a rational expectations equilibrium with those of bank runs as a perfect Bayesian equilibrium.