We develop a model of bank risk-taking with strategic sovereign default risk. Domestic banks invest in real projects … their default risks through purchases of bonds. But, for high debt levels, this influence is lost since bank and government …

bank issues covered bonds backed by a pool of assets that is bankruptcy remote and replenished following losses …. Encumbering assets allows a bank to raise cheap secured debt and expand profitable investment, but it also concentrates risk on … unsecured debt and thus exacerbates fragility and raises unsecured funding costs. Deposit insurance or wholesale funding …

This study investigates the bank competition-stability nexus using a unique regulatory dataset provided by the Deutsche … Bundesbank over the period 1994 to 2010. First, we use outright bank defaults as the most direct measure of bank risk available … and contrast the results to weaker forms of bank distress. Second, we control for a wide array of different time …

concerned about being induced to finance bad risk projects when conditions deteriorate. A monopoly bank provides the socially … schlechten Projekte zu finanzieren. Eine monopolistische Bank leistet die sozial-optimale Auswahl guter Risiken, aber die …