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This paper identifies two types of market failures. The first concerns a coordination problem associated with panics. The problem in analysing this type of market failure from a policy perspective is that there is no widely accepted method for selecting equilibria. The second market failure...
Persistent link: https://www.econbiz.de/10003750988
interconnectedness on the banks' failure probability can be alleviated if bank capital regulation is properly designed. This paper … supports the conclusion in Allen and Gale (2000) that a complete financial system in which each bank is connected to all the …
Persistent link: https://www.econbiz.de/10012979287
We survey 149 leading academic researchers on bank capital regulation. The median (average) respondent prefers a 10 … strongly an expert believes that higher capital requirements would increase the cost of bank lending. …
Persistent link: https://www.econbiz.de/10012225424
Persistent link: https://www.econbiz.de/10009308151
disciplining banks. Under our proposal, investors buy the subdebt of a bank only if they receive favourable information about the … bank, and the bank is subject to a regulatory examination if it fails to issue subdebt. By forcing banks to be examined …-destroying actions to benefit themselves, but may also encourage banks to lower asset risk. It shows that subdebt regulation and bank …
Persistent link: https://www.econbiz.de/10013118815
We build a general equilibrium model of banks' optimal capital structure, where bankruptcy is costly and investors have heterogenous endowments and incur a cost for participating in equity markets. We show that banks raise both deposits and equity, and that investors are willing to hold equity...
Persistent link: https://www.econbiz.de/10012906363
We investigate the effects of credit ratings-contingent financial regulation on foreign bank lending behavior. We … examine the sensitivity of international bank flows to debtor countries' sovereign credit rating changes before and after the …
Persistent link: https://www.econbiz.de/10012993692
​We investigate the effects of credit ratings-contingent financial regulation on foreign bank lending behavior. We … examine the sensitivity of international bank flows to debtor countries' sovereign credit rating changes before and after the …
Persistent link: https://www.econbiz.de/10013032128
We investigate the effects of credit ratings-contingent financial regulation on foreign bank lending behavior. We … examine the sensitivity of international bank flows to debtor countries' sovereign credit rating changes before and after the …
Persistent link: https://www.econbiz.de/10013030630
Persistent link: https://www.econbiz.de/10011604338