and examine the implications for bank risk. We find that banks use LLPs to manage the level and volatility of earnings … expected and unexpected losses that affects bank risk and profitability. …

In this study we disentangle two dimensions of banks' systemic risk: the level of bank tail risk and the linkage … between a bank's tail risk and severe shocks in the financial system. We employ a measure of the systemic risk of financial … bank characteristics are related to bank tail risk and systemic linkage. The interrelationship between bank characteristics …

This paper reviews studies exploring how higher bank capital requirements affect economic growth. There is little … evidence of a direct effect; research focuses on the indirect effects of capital requirements on credit supply, bank asset risk …, and cost of bank capital, which in turn can affect economic growth. Banks facing higher capital requirements can reduce …

This report presents an overview of the theory of regulation in general, with special attention for the regulation of … banks. Two theories of government regulation are described. The first, normative, theory uses market failures as the … justification of government regulation. The second, positive, theory explains the existence of regulation as the outcome of the …

This study aims at assessing empirically the determinants of changes in risk-weighted bank capital ratios in the 1990s … in Germany, France, Italy, the Netherlands, the UK and the US. Both bank-specific characteristics, factors at the banking … industry level and the degree of undercapitalization are found to be relevant for bank capital ratios. The results suggest that …

emerges from the theory on risk management, both from a market and a firm perspective. After describing the Dutch …

interaction between business cycles and bank behaviour over the past two decades for 26 industrial countries. As expected, profits … as (shortage of) capital, which contradicts the assumptions underlying capital crunch theory. All in all, over the last …

banks. However if in extreme scenarios the LCR becomes a binding constraint, the interaction of bank behaviour with the … regulatory rule can have negative externalities. We simulate the systemic implications of the LCR by a liquidity stress …-testing model, which takes into account the impact of bank reactions on second round feedback effects. We show that a flexible …

This paper gives an overview of the recent literature on bank business models, structured along what we deem to be the … supervision towards the analysis of bank business models with a sound economic basis. The bottom-line for supervisors - in our … view - is that it is essential to understand where the profit comes from and what risks the bank or the banking sector is …

This paper experimentally studies the impact of uncertainty about bank and borrower fundamentals on loan repayment. We … about bank weakness. Borrowers are also less likely to repay in the presence of higher uncertainty regarding other … individual borrower, loss aversion and negative past experiences reduce repayment, suggesting that bank failure can be contagious …