Asset Transfers and Self-Fulfilling Runs

We introduce a new mechanism that eliminates self-fulfilling runs on a Diamond Dybvig intermediary. If a depositor wants to end their relationship with the intermediary early, they can withdraw goods or take ownership of unliquidated assets from the intermediary’s balance sheet. We interpret this mechanism as a repo contract or a bankruptcy plan. What frictions prevent intermediaries from transferring assets to depositors? High transaction costs and within-intermediary idiosyncratic return risk. Our results are robust to the introduction of an asset market with adverse selection.