, procyclical leverage does not occur. For banks without a binding constraint, fair value and bank regulation both can contribute to … procyclical leverage. Empirical findings based on a large sample of US commercial banks reveal that bank regulation explains …

fair value would not fairly represent a bank's business model. In this study we examine whether financial statements using … measures we consider are bond yield spreads and future bank failure. We find that leverage measured using the fair values of … financial instruments explains significantly more variation in bond yield spreads and bank failure than the other less fair …