Our study contributes to two strands of literature. For liquidityrisk, these are the seminal works of Bryant (1980) and Diamondand Dybvig (1983) which have been extended, refined and appliednumerous times by e.g. Calomiris and Kahn (1991), Diamond andRajan (2001), and most recently Berger and Bouwman (2009).4The credit risk studies we build on are too numerous to be mentionedin full; the most recent examples include e.g. Illueca et al.(2008), Laeven and Levine (2009), Foos et al. (2010), Houston et al.(2010), and also Rajan and Winton (1995), Boot (2000), and Bergerand Udell (2004) (a very in-depth overview of earlier studies is providedby e.g. Altman and Saunders, 1998).