This paper analyzes the effects of several policy instruments to mitigate financial bubbles generated in the banking … policy instruments in counteracting financial bubbles. We find that an endogenous capital requirement reduces the impact of a …

that SPC in general might be a useful tool in constructing early warning systems for asset price bubbles. -- statistical … process control ; real estate ; asset prices bubbles ; early warning systems …

profitability of banks’ portfolios affect their ability to cover for any liquidity shortage and hence influence the premium they … require to carry maturity risk. During a boom, profitability is increasing and thus spreads are low, while during a recession … profitability is decreasing and spreads are high, in accordance with the cyclical properties of term spreads in the data. Second, we …

optimal dynamic control problem is characterized by two stochastic state variables: the equity value, and profitability (ROA …) of the _rm. According to the empirical evidence, we let profitability follow a mean reverting process. The problem is …