Traditional theory suggests that higher bank profitability (or franchise value) dissuades bank risk-taking. We … highlight an opposite effect: higher profitability loosens bank borrowing constraints. This enables profitable banks to take … risk on a larger scale, inducing risk-taking. This effect is more pronounced when bank leverage constraints are looser, or …

We investigate the transmission of central bank liquidity to bank deposits and loan spreads in Europe over the period … from January 2006 to June 2010. We find evidence consistent with an impaired transmission channel due to bank risk. Central … bank liquidity does not translate into lower loan spreads for high-risk banks for maturities beyond one year, even as it …

finance premium, while a BGG model generates too low volatility. The full model also matches the procyclicality of bank …

Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes … funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending … on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis …

requirements. We find that an increase in the bankspecific regulatory capital requirement results in a higher bank capital ratio … and higher bank leverage. We do not observe differences between confidential and public disclosure of capital requirements …. Our results empirically illustrate a tradeoff between bank resilience and a fostering of the economy through more bank …

The general view underlying bank regulation is that bank disclosures providemarket discipline and reduce banks’ risk …-taking incentives. We show that bankdisclosures can increase bank leverage and bank risk. The reason stems from theinteraction between … insured and uninsured debt. Bank disclosures reduce the agencyproblem between uninsured debt and equity, thereby lowering the …