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A large literature studies bank regulatory policies intendedto control moral hazard problems associated with … depositinsurance and optimal regulatory design. Much of theanalysis has focused on uniform bank capital requirements,risk-based capital ….All formal analyses employ highly simplifiedtreatments of an individual bank or banking system. Thisstudy is concerned with the …
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),1 which leads to “fire-sale”–related pecuniaryexternalities; and bank interconnectedness (Allen and Gale2000; Kahn and Santos …
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