imply that an individual bank failure in one country could trigger negative spillover effects in another country. Such cross … from a supranational perspective. In consequence, the probability of a bank failure will be inefficiently high. Against the …

competition and stability in banking. There are two basic channels through which competition may increase instability: by … incentives to take risk and raise failure probabilities. The competition-stability trade-off is characterized and the … implications of the analysis for regulation and competition policy are derived. It is found that optimal regulation may depend on …

Limited liability and asymmetric information between an investment bank and its lenders provide an incentive for a bank … imposed solvency constraints on banks. However, these constraints may not survive in systems competition, as systems … competition is likely to suffer from the same type of information asymmetry which induced the private market failure and which …

incentives to implement such a trigger? We construct a theoretical model of a bank that is financed with debt and equity, and a … bank manager monitoring the bank’s loan portfolio. The manager must be incentivized to warn the board before a crisis …

This paper estimates ordered logit and probit regression models for bank ratings which also include a country index to … bank ratings assigned by Fitch Ratings are underpinned by fundamental quantitative financial analyses. Also, there is … strong evidence of a country effect. Our model is shown to provide accurate predictions of bank ratings for the period prior …

This paper analyzes the effect of the removal of government guarantees on bank risk taking. We exploit the removal of …