Mehran, Hamid; Thakor, Anjan - 2009
We address two questions: (i) Are bank capital structure and value correlated in the cross section, and if so, how? (ii …) If bank capital does affect bank value, how are the components of bank value affected by capital? We first develop a … dynamic model with a dissipative cost of bank capital that is traded off against the benefits of capital: strengthened …