the sovereign debt crisis. This paper investigates the impact of this announcement on bank share prices, bank CDS spreads … and sovereign CDS spreads. The main private beneficiaries were bank creditors, especially of banks heavily exposed to … CDS spreads. The combined gains of bank debt holders and shareholders exceed the increase in the value of their sovereign …

asymmetric information and no excess profits. It captures the possibility of bank runs and business cycle risk; but it ignores …

pre-crisis bank behavior, and suggest implications for the optimal design of capital regulation. …

short-run; leverage requirements reduce default risk but may significantly reduce bank value; mispriced deposit insurance …

to liquidity assistance as a solution to forbearance. Faced with a bank that chooses capital and liquidity, the … credible, while always bailing out causes moral hazard. In equilibrium, the bank chooses above minimum capital and liquidity … is higher for a regulator more concerned about bank failure, and when the bailout penalty for the bank is higher; this …

-back clauses for compensation contracts in the financial sector. We study a multi-task setting in which a bank employee, the agent …

efficient’. While Central Bank policy may have shifted radically now that stability is an explicit objective of policy, the same …