Cociuba, Simona E.; Shukayev, Malik; Ueberfeldt, Alexander - 2016
We develop a model in which a financial intermediary's investment in risky assets - risk taking - is excessive due to … limited liability and deposit insurance, and characterize the policy tools that implement efficient risk taking. In the … leverage regulation, and a tax on profits - achieves efficiency. Interest rate policy mitigates excessive risk taking, by …