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 …

firms (i.e., firms with few tangible assets and bank-dependent borrowers) and for banks that presumably rely more on "soft …We show that competition adversely affects the "specialness" of bank lending. In particular, we observe that the … positive abnormal return on the borrowing firm's stock after the announcement of a bank loan is reduced in US states that …