Deteriorating public finances around the world raise doubts about countries’ abilities to bail out their largest banks …. For an international sample of banks, this paper investigates the impact of government indebtedness and deficits on bank … respond negatively to deficits. We present evidence that in 2008 systemically large banks saw a reduction in their market …

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 …

Many economists argue that the primary economic function of banks is to provide cheap credit, and to facilitate this … function, they advocate the strict protection and enforcement of creditor rights. But banks can serve another important … market equilibria in which cheap credit is inappropriately emphasized over project screening. Restrictions on collateral …

collateral requirements by banks may lead to a further decrease in the level of economic efficiency attained. We discuss bank …In the course of ordinary business, commercial banks frequently encounter entrepreneurs seeking loans for the purpose … relationship between banks and possible optimistic entrepreneurs. We examine this capital market from the stand-point of economic …

is large, the regulator finds it ex-post optimal to bail out some or all failed banks, whereas when the number of bank … failures is small, failed banks can be acquired by the surviving banks. This gives banks incentives to herd and increases … systemic risk, the risk that many banks may fail together. The ex-post optimal regulation may thus be sub-optimal from an ex …

During the recent financial crisis, central banks have provided liquidity and governments have set up rescue programmes … situation on financial markets, in which banks take less risk but also provide less credit to the economy …

banks have provided liquidity and ministries of finance have set up rescue programmes to restore confidence and stability … authority faces a trade-off: when it imposes strict bailout conditions, investment increases but moral hazard ensues. Milder … bailout conditions reduce excessive risk taking at the expense of investment. This resembles the current situation on …

crises. We show that programs attracting all banks dominate those attracting only troubled banks, and that simple guarantees …