Today’s regulatory rules, especially the easily-manipulated measures of regulatory capital, have led to costly bank … failures. We design a robust regulatory system such that (i) bank losses are credibly borne by the private sector (ii …) systemically important institutions cannot collapse suddenly; (iii) bank investment is counter-cyclical; and (iv) regulatory …

creating counter-cyclical incentives for banks to raise capital, and so encourage bank lending in bad times. They avoid the …

are highly procyclical, bank failures strongly countercyclical and increasing in leverage. Tightening capital requirements …

We address the following questions concerning bank capital: why are banks so highly levered, what are the consequences … of this leverage for the economy as a whole, and how can robust capital regulation be designed to restrict bank leverage … to levels that do not generate excessive systemic risk? Bank leverage choices are a delicate balancing act: credit …

bank lending to examine what an optimal combination of monetary policy and regulatory capital requirements might look like … that equilibrium level of central bank policy rates should be lower than they had been prior to the crisis. …

This paper studies the strategic interaction between a bank whose deposits are randomly withdrawn, and a lender of last … resort (LLR) that bases its decision on supervisory information on the quality of the bank’s assets. The bank is subject to a …. Moreover, when the LLR does not charge penalty rates, the bank chooses the same level of risk and a smaller liquidity buffer …