We analyze the problem of a policy authority (PA) that must decide when to resolve a troubled bank whose underlying … solvency is uncertain. Delaying resolution increases the chance that information arrives that reveals the bank's true solvency … efficient resolution decision following the arrival of information. Providing the bank with liquidity support buys the PA time …

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 …

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 …

A bank's decision on loan supply and capital structure determines its immediate bankruptcy risk as well as the future … availability of internal funds. These internal funds in turn determine a bank's future costs of external finance and future …-to-asset ratios, liquidity coverage ratios and regulatory margin calls on the dynamics of loan supply and bank stability. Only …

quantitative models in a new perspective. This knowledge may prove valuable for regulators who aim to understand bank behaviour and …

In attempting to promote bank stability, the Basel Committee on Banking Supervision (2006) provides a framework that … regarding the treatment of tail risk. -- Bank regulation ; bank stability ; Basel framework ; crisis ; tail risk …

the proprietary bank-to-bank European interbank dataset extracted from Target2 and also exploit the Lehman and sovereign …

Cyber attacks can impair banks operations and precipitate bank runs. When digital infrastructure is shared, banks … banks interacts with the ex post coordination frictions underpinning bank runs. While the temptation to free-ride induces … sensitive to rollover risk and bank heterogeneity. Regulatory measures, including negligence rules, liquidity regulation and …

How do real interest rates affect financial fragility? We study this issue in a model in which bank borrowing is … subject to rollover risk. A bank’s optimal borrowing trades off the benefit from investing additional funds into profitable … assets with the cost of greater risk of a run by bank creditors. Changes in the interest rate affect the price and amount of …