Increasing investment in human resource relative to information technology system in retail banking delivery channels increases the optimal bank interest margin and decreases the default risk in the bank¡¯s equity returns during a financial crisis. Raising the regulatory barrier inducing a...

We study the optimal bank interest margin and default risk under the capped ratio schedule of government capital instruments in the Basel III Capital Adequacy Accord and the Deposit Insurance Fund arrangement program. We show that an increase in the capped ratio (a decrease in the capped...