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 …

Motivated by the build-up of shadow bank leverage prior to the financial crisis of 2007-2008, I develop a nonlinear …

What is the impact of a sudden and sizeable increase in bank capital requirements on the lending activity by directly … affected banks and by non-affected non-bank financial institutions (NBFIs)? To answer this question, we apply a difference … activities, in riskier and more competitive borrower segments, but NBFIs do not seem to rely on increased bank funding to finance …