Bank risk-based capital (RBC) standards require banks to hold differing amounts of capital for different classes of … weights accurately reflect bank asset risk, we find that the weights fail even in their limited goal of correctly quantifying … are considered in the RBC regulations. We also examine other types of bank risk by estimating a simple factor model that …

Regulation consists of rulemaking and enforcement. Economic theory offers two complementary rationales for regulating … and efficiency across society as a whole. Agency-cost theory recognizes that incentive conflicts and coordination problems … financial services by improving incentives to perform contractual obligations in stress- stressful situations. These private …

This study examines the misallocation of credit in Japan associated with the perverse incentives of banks to provide … condition, and these firms continue to perform poorly after receiving additional bank financing. Troubled Japanese banks …

depression, this paper embeds a trade-off theory of capital structure into a real business cycle model with a small, time …

Yes, it did. We use exogenous variation in banks' incentives to conform to the standards of the Community Reinvestment …

Bank balance sheet lending is commonly viewed as the predominant form of lending. We document and study two margins of … document the limits of the shadow bank substitution margin: shadow banks substitute for traditional—deposit-taking—banks in … quantitative consequences of several policies on lending volume and pricing, bank stability, and the distribution of consumer …

their investors. We show the bank has to have a fragile capital structure, subject to bank runs, in order to perform these … functions. Far from being an aberration to be regulated away, the funding of illiquid loans by a bank with volatile demand … such as narrow banking and bank capital requirements …