A large theoretical literature shows that competition reduces banks' franchise values and induces them to take more … risk. Recent research contradicts this result: When banks charge lower rates, their borrowers have an incentive to choose … rates also reduce the banks' revenues from non-defaulting loans. This paper shows that when this effect is taken into …

-financial firm and commercial bank before the crisis, but the picture was quite different for large commercial banks States and for … investment banks worldwide. We document the following patterns: a) there was an increase in leverage ratios of investment banks … and financial firms during the early 2000s; b) there was no visible increase for commercial banks and non-financial firms …

firms. Coupled with imperfect competition in the banking sector, this means that banks with chronically high excess reserves …

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 …

transactions, and use savings for the largest transactions. Finally, the paper shows that modeling banks as suppliers of liquidity …