choose their portfolio risk, bank size, and capital holdings. Banks voluntarily hold equity when the buffer effect against … the risk of default outweighs the cost advantages of debt financing. In the optimum, banks with lower monitoring costs are … to make higher-risk portfolios more attractive. Accounting for banks’ interior capital choices can thus explain why …

identify an asymmetric information problem: borrowers signal low financial risk to banks who are uncertain about borrower risk …

We argue that risk sharing motivates the bank-wide structure of bonus pay. In the presence of financial frictions that … make external financing costly, the optimal contract between shareholders and employees involves some degree of risk … to rationalize with incentive theories of bonus pay - but support an important risk sharing motive. In particular …

times. The paper analyzes how these government programs influence credit allocation, indebtedness, and risk at both the … firms. The uptake of the employment program is not associated with risk, as firms internalize the opportunity cost of … expansion of the credit program by supporting firms and enabling banks to screen firms better. Macroeconomic risk of the credit …

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

Banking regulation invites banks to gamble when buying government bonds that regulators consider to be risk-free. The … regulation in order to enhance their fiscal leeway. We examine an unintended side-effect of banking regulation, namely the zero-risk …. By contrast, the EU would benefit from more risk-based macroprudential regulation and a more credible constitutional no …

We examine systemic risk in the Chinese banking system by estimating the conditional value at risk (CoVaR), the … China. Although these measures show different patterns, our results suggest that systemic risk in the Chinese banking system … that Chinese banks are at greater risk according to the CoVaR, the SII and the VI approaches, but have the lowest MES. …