Several countries have recently introduced national capital standards exceeding the internationally coordinated Basel III rules, thus suggesting a ‘race to the top' in capital standards. We study regulatory competition when banks are heterogeneous and give loans to firms that produce output in...

We present a network model of the interbank market in which optimizing risk averse banks lend to each other and invest in non-liquid assets. Market clearing takes place through a tâtonnement process which yields the equilibrium price, while traded quantities are determined by means of a...

During the last decades a consensus has emerged that it is impossible to disentangle liquidity shocks from solvency shocks. As a consequence the classical lender of last resort rules, as defined by Thornton and Bagehot, based on lending to solvent illiquid institutions appear ill-suited to this...

We set up a two-country, regional model of trade in financial services. Competitive firms in each country manufacture untraded consumer goods in an uncertain productive environment, borrowing funds from a bank in either the home or the foreign market. Duopolistic banks can choose their levels of...

We study how net neutrality regulations affect a high-bandwidth content provider's (CP) investment incentives in quality of services (QoS). We find that the effects crucially depend on network capacity levels. With limited capacity, as in mobile networks, prioritized delivery services are...