factor. The pull factor captures flows of bank loans to the domestic non-financial private sector. An increase in these flows … less clear-cut. The paper also shows that variations in the flows of bank loans to the non-financial private sector (i …

lending behavior and risk sensitivity of a risk-neutral bank. CDS contracts may be used to hedge a bank's credit risk exposure … at a certain (potentially distorted) price. Regulation is found to induce the risk-neutral bank to behave in a more risk … credit risk. Under the substitution approach in Basel II (and III) a risk-neutral bank will over-, fully or under-hedge its …