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Fallacies, irrelevant facts, and myths in the discussion of capital regulation : why bank equity is not socially expensive

Admati, Anat R.; DeMarzo, Peter M.; Hellwig, Martin; … - 2013

. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. And while … debtś informational insensitivity may provide valuable liquidity, increased capital (and reduced leverage) can enhance this … benefit. Finally, suggestions that high leverage serves a necessary disciplining role are based on inadequate theory lacking …

Persistent link: https://www.econbiz.de/10010203632

Fallacies, irrelevant facts, and myths in the discussion of capital regulation : why bank equity is not expensive

Admati, Anat R.; DeMarzo, Peter M.; Hellwig, Martin; … - 2010

also incorrect to translate higher taxes paid by banks to a social cost. Policies that subsidize debt and indirectly … should be given directly and not in ways that encourage leverage. Finally, suggestions that high leverage serves a necessary …, and that high leverage is not necessary for banks to perform all their socially valuable functions, including lending …

Persistent link: https://www.econbiz.de/10008662565

Debt overhang and capital regulation

Admati, Anat R.; DeMarzo, Peter M.; Hellwig, Martin; … - 2012

result of debt overhang, shareholders have incentives to resist reductions in leverage that make the remaining debt safer … combined value of the firm to shareholders and creditors. Moreover, debt overhang creates an "addiction" to leverage through a …We analyze shareholders' incentives to change the leverage of a firm that has already borrowed substantially. As a …

Persistent link: https://www.econbiz.de/10009528814

Banks as regulated traders

Falato, Antonio; Iercosan, Diana; Zikes, Filip - 2018

This paper uses detailed high-frequency regulatory data to evaluate whether trading increases or decreases systemic risk in the U.S. banking sector. We estimate the sensitivity of weekly bank trading net profits to a variety of aggregate risk factors, which include equities, fixed-income,...

Persistent link: https://www.econbiz.de/10012017492

System-wide and banks' internal stress tests : regulatory requirements and literature review

Pliszka, Kamil - 2021

This paper deals with both system-wide and banks' internal stress tests. For system-wide stress tests it describes the evolution over time, compares the stress test design in major jurisdictions, and discusses academic research. System-wide stress tests have gained in importance and nowadays...

Persistent link: https://www.econbiz.de/10012534563

Bank capital buffers in a dynamic model

Mankart, Jochen; Michaelides, Alexander G.; Pagratis, Spyros - 2019

unweighted leverage requirements, their differential impact on bank lending, and equity buffer accumulation in excess of …. Tighter leverage requirements, on the other hand, increase lending, preserve bank charter value and incentives to accumulate …

Persistent link: https://www.econbiz.de/10011955629

Liquidity requirements, free-riding, and the implications for financial stability evidence from the early 1900s

Carlson, Mark; Jaremski, Matthew - 2018

Maintaining sufficient liquidity in the financial system is vital for financial stability. However, since returns on liquid assets are typically low, individual financial institutions may seek to hold fewer such assets, especially if they believe they can rely on other institutions for liquidity...

Persistent link: https://www.econbiz.de/10011927091