competitive environment affect bank monitoring choices and the effectiveness of capital regulation? Our approach deviates from the …

separating equilibrium with no limit pricing; thelow-cost incumbent repays more to the bank in the first period, due to the … threat of entry; andthere are parameter values for which the bank makes more profits with the threat of entry thanwithout. …

We analyse the poisonous interaction between bank rescues, financial fragility and sovereign debt discounts. In our … sovereign debt discount. We introduce long term government debt, which gives rise to the possibility of capital losses on bank … intermediaries causes bond prices to drop triggering capital losses at the bank under intervention. This mechanism shows the limits …

removing barriers to bank entry on bank competition and economic growth. As governments were not concerned about systemic … stability in this period, we are able to isolate the effects of bank competition from those of state implicit guarantees. We … find that the introduction of free banking laws stimulated the creation of new banks and led to more bank failures. Our …