An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to ‘overshoot’ equilibrium when an asset bubble bursts - threatening widespread insolvency and what Richard Koo calls a ‘balance sheet recession’....

This paper attempts to evaluate the competitiveness of British banking in the presence of cross-selling and switching costs during 1993–2008. It presents estimates of a model of banking behaviour that encompasses switching costs as well as cross-selling of loans and off-balance sheet...

Switching costs are a key determinant of market performance. This paper tests their existence in the corporate loan market in which they are likely to play a central role because of the complexity of contracts and the relevance of informational problems. Using very detailed data at bank–firm...

I examine the relationship between bank efficiency and market power to test the quiet life hypothesis for a sample of 419 Latin American commercial banks between 1985 and 2010. A two-stage least squares model with instrumental variables controls for the simultaneous relationship between...

What drives bankers to create larger and larger, often multinational banking groups? In this paper we investigate whether the targets in cross-border bank M&As are materially different from those banks targeted in domestic M&A deals. The main message of this paper is that, with few exceptions,...

An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to 'overshoot' equilibrium when an asset bubble bursts--threatening widespread insolvency and what Richard Koo calls a 'balance sheet recession'. Besides...

Purpose – The purpose of this paper is to examine the implicit subsidies received, in the form of stock market returns, from the perception that large banking organizations are too big to fail, and implications for financial regulation. Design/methodology/approach – The empirical analysis...

We measure cost efficiency of commercial banks in Taiwan using annual data for the 1996–2011 period. Following Caudill et al. (1995), and Caudill and Ford (1993), we develop a generalized dynamic model that accounts for heteroskedasticity in the cost inefficiency component of the error term in...

El objetivo de este trabajo empírico es investigar la influencia de las características económico-financieras y de gobierno corporativo sobre el valor en bolsa de una muestra de bancos europeos durante últimos años. A estos efectos, se contrastan varias hipótesis teóricas mediante...