This paper seeks to understand the interplay between banks, bank regulation, sovereign default risk and central bank … guarantees in a monetary union. I assume that banks can use sovereign bonds for repurchase agreements with a common central bank … cheaply, effectively shifting the risk of some of the potential sovereign default losses on the common central bank. …

This paper models the strategic interaction between a rating agency, a bank and a bank regulator who lacks information … about bank asset risk. The regulator can either (1) make bank capital requirements contingent on credit ratings; or (2) set … constrain high risk bank investment without simultaneously reducing overall investment volume. However, if collusion between the …

address the following questions. How are macroeconomic shocks transmitted to bank risk and other banking variables? What are … the sources of bank heterogeneity, and what explains differences in individual banks’ responses to macroeconomic shocks …? Our paper has two main findings: (i) Average bank risk declines, and average bank lending increases following expansionary …

intervention have stronger effects beyond borders. We provide a model of international contagion allowing for bank bailouts. While …

turmoil has thrown up issues for discussion. These include: 1. The scale and scope of deposit insurance; 2. Bank insolvency … regimes, also known as ‘prompt corrective action’; 3. Money market operations by Central Banks; 4. Commercial bank liquidity …