rejects marginally profitable projects. Collateral mitigates this inefficiency by 'flattening' the local lender’s payoff …-à-vis transaction lenders lead to higher collateral requirements, thus strengthening the role of collateral in local lending …

This paper studies the impact of competition on the determination of interest rates, and on banks’ risk taking … lower entry costs foster competition in deposit rates and reduce banks’ incentives to limit risk exposure. While higher … insurance coverage amplifies this effect, two alternative arrangements (risk based contributions to the deposit insurance fund …

the labour market for traders intensifies, banks optimally offer top traders contracts inducing them to take more risk … to reduced risk-taking by their top traders. …

mandates may not be optimal. To improve risk-sharing, screening can instead be induced via separating contracts by compelling … banks to choose from a menu of junior tranche retention sizes. In either case, efficiency of risk-sharing is maximized by … generally leads to higher welfare if efficient risk-sharing (bank investment scale) is the dominant consideration, and is always …

's sovereign debt default. While diversification generates risk diversification benefits ex ante, it also generates contagion ex … government debt. The safest governments inefficiently restrict the amount of high quality debt that could be used as collateral …