) focus and diversification using a unique data set that is able to identify individual bank loan exposures to different … deterioration in bank monitoring quality at high levels of risk and a deterioration in bank monitoring quality upon lending … expansion into newer or competitive industries. We find that industrial loan diversification reduces bank return while …

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 … that is able to bail out the bank either by injecting capital at a fixed return or by receiving an equity claim. This …

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

liability of banks and the presence of a negative externality of one bank’s failure on the health of other banks give rise to a … risk. Regulatory mechanisms such as bank closure policy and capital adequacy requirements that are commonly based only on a … bank’s own risk fail to mitigate aggregate risk-shifting incentives, and can, in fact, accentuate systemic risk. Prudential …

We model the interaction between two economies where banks exhibit both adverse selection and moral hazard and bank … 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 …

The merit of having international convergence of bank capital requirements in the presence of divergent closure … policies of different central banks is examined. While the privately optimal level of bank capital decreases with regulatory … forbearance (they are strategic substitutes), the socially optimal level of bank capital increases with regulatory forbearance …

This Paper shows that bank closure policies suffer from a ‘too-many-to-fail’ problem: when the number of bank failures … is large, the regulator finds it ex-post optimal to bail out some or all failed banks, whereas when the number of bank …-ante standpoint. We formalize this time-inconsistency of bank regulation. We also argue that by allowing banks to purchase failed …

As the number of bank failures increases, the set of assets available for acquisition by the surviving banks enlarges … for liquidation of banking assets. At a sufficiently large number of bank failures, and in turn, at a sufficiently low … and allowing the regulator to price-discriminate against outsiders in the market for bank sales. …