Essays on the limits of borrowing

The aim of this research is to provide new insights about the limits of borrowing. The second chapter contributes to the theory of limits of borrowing by a study of LOLRs in an original model. The third chapter introduces a new approach to test and measure the limits of borrowing econometrically. It also contributes to the empirical understanding of the limits of borrowing by applying the new approach to test the cyclical behavior and the effects of regulation on the limits of borrowing. The fourth chapter contributes to our understanding of the effect of limits of borrowing on consumption. The fifth chapter yields new insight about the effect of bank ownership on the limits of borrowing during a financial crisis.