paper shows that financial regulation can be effective at mitigating this type of risk. Exploiting regulatory changes … financial institutions subject to stricter regulation. Following the easing of these regulations, overconfidence-induced risk …A large body of literature finds that managerial overconfidence increases risk-taking by financial institutions. This …

(LTV), a countercyclical capital buffer (CCyB)-style rule and sectoral constraints similar to sectoral risk weights. The … sectoral risk weights to correct for sector specific developments. Simple sectoral shocks can be dealt with or responded to … first with sectoral risk weights. The LTV is much more effective than sectoral risk weights in confining credit growth, but …

requirements and, for example, have to ensure capital adequacy if the internal risk parameters are being stressed. The academic … scenarios which are selected on the basis of algorithms that consider historical characteristics of the risk factors …. Furthermore, banks' conventional credit risk models can be modified and used for stress testing. As stress testing is exposed to …

Uncertainty in election outcomes generates politically induced regulatory risk. For monopoly regulation, political … parties' risk attitudes towards such risk depend on a fluctuation effect that hurts both parties and an output …-expansion effect that benefits at least one party. Irrespective of the parties' risk attitudes, political parties have incentives to …

We show that banks' risk exposure in one asset category affects how they report regulatory risk weights for another … asset category. Specifically, banks report lower credit risk weights for their loan portfolio when they face higher risk … constraints. Our results suggest the existence of incentive spillovers across different risk categories. We relate this behavior …