Liquidity risk is one of the major risks faced by banks in addition to credit risk, market risk and operating risk. In this paper we construct a stylized model of bank management where the asset and liabilities liquidity structure are a key element in determining the bank's exposure to liquidity...

In recent years market discipline attracted interest as a mechanism to augment or to partially replace government oversight (discipline) of the financial sector, specifically depository institutions. Despite the abundance of research, mostly empirical studies, in the area no formal model has...

In recent years market discipline attracted interest as a mechanism to augment or to partially replace government oversight (discipline) of the financial sector, specifically depository institutions. Despite the abundance of research, mostly empirical studies, in the area no formal model has...

During the 2007-2009 crises financial institutions have come underincreasing pressure from regulators, politicians and shareholders tochange their compensation practices in order to remove the incentive forshort term excessive risk taking. In this paper we analyze first how thecommon executive...

The financial crisis motivated thinking about interaction between financial and monetary stability policies. These policies are more interrelated than previously thought. The purpose of the paper is to develop an analytical framework that analyzes these interactions. We use an...

A sovereign that is issuing debt denominated in foreign currency is exposed to a mismatch between the value of its assets that can be used to serve the debt, denominated in local currency, and the value of its liability. During economic crisis, when the probability of default by the sovereign...

During the 2007-2009 crises financial institutions have come under increasing pressure from regulators, politicians and shareholders to change their compensation practices in order to remove the incentive for short-term excessive risk taking In this paper we analyze how commonly used executive...

During the 2007-2009 crises financial institutions have come under increasing pressure from regulators, politicians and shareholders to change their compensation practices in order to remove the incentive for short term excessive risk taking. In this paper we analyze first how the common...