"This paper explores sources of deposit dollarization unrelated to standard moral hazard arguments. We develop a model in which banks choose the optimal currency composition of their liabilities. We argue that the equal treatment of peso and dollar claims in the event of bank default can induce...

Following the investment-cash flow literature, we test whether bank lending is constrained by the availability of insured deposits--a necessary condition for the existence of bank lending channel of monetary policy. We treat insured deposits as a type of "internal fund," similar to cash flows....

The moral hazard problem associated with deposit insurance generates the potential for excessive risk taking on the part of bank owners. The banking literature identifies franchise value--a firm's profit-generating potential--as one force mitigating that risk taking. We argue that in the...

The moral hazard problem associated with deposit insurance generates the potential for excessive risk taking on the part of bank owners. The banking literature identifies franchise value -- a firm’s profit-generating potential -- as one force mitigating that risk taking. We argue that in the...

Remarks at Banking Law Symposium 2011, Paris, France.