This paper analyses the optimal conglomeration of bank activities. We show that the effectiveness of market discipline …

This paper provides an explanation for the urge of banks to merge and expand scope. We build a model where bank … sufficiently profitable to give the bank the necessary ‘deep pockets’ to absorb these losses. The latter suggests that banking may …

We study the effects of a bank’s engagement in trading. Traditional banking is relationship-based: not scalable, long …-based: scalable, short-term, capital constrained, and with the ability to generate risk from concentrated positions. When a bank … inefficiencies. A bank may allocate too much capital to trading ex-post, compromising the incentives to build relationships ex …

competitive environment affect bank monitoring choices and the effectiveness of capital regulation? Our approach deviates from the …