We provide a theoretical foundation for the claim that prolonged periods of easy monetary conditions increase bank risk … taking. The net effect of a monetary policy change on bank monitoring (an inverse measure of risk taking) depends on the … structures, a monetary easing leads to greater leverage and lower monitoring. However, if a bank''s capital structure is fixed …

the real economy. The study also runs an empirical exercise to estimate the costs of bank narrowness and draws policy …

of the traditional bank business model. Specialized providers of financial services can chip away activities that do not …

banks can extract market power rents. We show that more bank competition results in lower economy-wide risk, lower bank … allocation and optimal levels of bank risk and capitalization. These results are at variance with those obtained by a large …

for banks from the relaxation of a binding prudential limit on maturity mismatch, in place in Italy until mid-2000s. The …

under different assumptions about deposit insurance and the dissemination of financial information. It finds that lower … insurance coverage amplifies this effect, two alternative arrangements (risk-based contributions to the insurance fund and …-based full deposit insurance yield the same equilibrium risk level, which is independent of entry costs. The welfare implications …