interconnectedness on the banks' failure probability can be alleviated if bank capital regulation is properly designed. This paper …This paper proposes that whether interconnectedness among banks leads to financial instability depends on banks … and the banks' failure probability. In the model, banks adopt the Value-at-Risk rule to make the capital structure …

We survey 149 leading academic researchers on bank capital regulation. The median (average) respondent prefers a 10 … strongly an expert believes that higher capital requirements would increase the cost of bank lending. …