the proprietary bank-to-bank European interbank dataset extracted from Target2 and also exploit the Lehman and sovereign …

that is able to bail out the bank either by injecting capital at a fixed return or by receiving an equity claim. This … bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity and monitors too little. A … central bank can alleviate the liquidity problem, but induces moral hazard. Therefore, we introduce an additional authority …

induces moral hazard. Therefore, we introduce a fiscal authority that is able to bail out the bank by injecting capital. This …. Using a model of a systemic bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity …

regulators try to resolve these problems. We find that liberalizing bank capital flows between economies reduces total welfare by … considerations arise in this context. Allowing multinationals improves welfare when bank capital can flow across borders, despite the …We model the interaction between two economies where banks exhibit both adverse selection and moral hazard and bank …

This paper analyzes financial institutions' capital allocation decisions when their required equity capital depends on … can be delegated through an economic value added (EVA) compensation contract and solve for the optimal capital allocation … precisely the notion of risk-adjusted return on capital (RAROC) and how it can be used as a performance measure. …

In this Paper we study the impact of credit risk transfer (CRT) on the stability and the efficiency of a financial …

bankrupt firm’s main creditor (a bank) to influence the auction outcome. Rules prevent the bank from bidding directly. However …, the bank often finances a bidder in the auction, relaxing liquidity constraints. We show that the optimal bid strategy for … a bank-bidder coalition mimics the monopolist sales price. In the region where the bank’s debt is impaired, this optimal …

foreigners. We use a bank-level panel data set spanning all British and foreign banks providing loans within the United Kingdom … credit guarantees, or received capital injections. We use standard empirical panel-data techniques to study the "loan mix …," domestic (British) loans of a bank expressed as a fraction of its total loan activity. We also study effective short …

Today’s regulatory rules, especially the easily-manipulated measures of regulatory capital, have led to costly bank … failures. We design a robust regulatory system such that (i) bank losses are credibly borne by the private sector (ii …) systemically important institutions cannot collapse suddenly; (iii) bank investment is counter-cyclical; and (iv) regulatory …

creating counter-cyclical incentives for banks to raise capital, and so encourage bank lending in bad times. They avoid the …We propose a new form of hybrid capital for banks, Equity Recourse Notes (ERNs), which ameliorate booms and busts by … the too-big-to-fail problem: rather than forcing banks to increase equity, we should require the same or larger capital …