This paper examines how risk in trading activity can affect the volatility of asset prices. We look for this … swap spread tends to converge to a long-run level, although trading risk can sometimes cause the spread to diverge from … that level. -- convergence trading ; interest rate swaps ; swap spread ; repurchase contracts ; trading risk ; volatility …

In moral hazard models, bank shareholders have incentives to transfer wealth from the deposit insurer - that is … despite the difficult financial environment, shareholders' risk-taking incentive was confined primarily to a small fraction of …, maximize put option value - by pursuing riskier strategies. For safe banks with large charter value, however, the risk …