We study the transmission of monetary policy through bank securities portfolios using granular supervisory data on U ….S. bank securities, hedging positions, and corporate credit. Banks that experienced larger losses on their securities during …

-systematic risk on the firm's choice of an optimal input mix. Consistent with earlier work in economics, this analysis demonstrates …

. More risk-averse entrepreneurs default earlier, but also choose higher leverage, even though leverage makes his equity more … risky. Non-diversified entrepreneurs demand both systematic and idiosyncratic risk premium. Cash-out option and external … equity further improve diversification and raise the entrepreneur's valuation of the firm. Finally, entrepreneurial risk …

Higher-beta and higher-volatility equities do not earn commensurately higher returns, a pattern known as the risk … anomaly. In this paper, we consider the possibility that the risk anomaly represents mispricing and develop its implications … for corporate leverage. The risk anomaly generates a simple tradeoff theory: At zero leverage, the overall cost of capital …

-generating strategy typically lowers the fund's risk-adjusted excess return due to frictions such as price pressure. When the manager is … via both management and incentive fees, we show that (i) the high-powered incentive fees encourage excessive risk taking … sufficiently poor fund performances substantially curtail managerial risk-taking, provide strong incentives to de-leverage, and …

from January 2006 to June 2010. We find evidence consistent with an impaired transmission channel due to bank risk. Central … bank liquidity does not translate into lower loan spreads for high-risk banks for maturities beyond one year, even as it … lowers deposit spreads for both high-risk and low-risk banks. This adversely affects the balance sheets of high-risk bank …

boom. Macro-prudential policies and an early intervention by the central bank to prevent market segmentation would also …