Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires … that information about the backing assets - loans - not be revealed, so that bank money does not fluctuate in value …, needed for allocative efficiency. Intermediaries exist to hide such information, so banks select portfolios of information …

, however, the expansion of risky lending and the concentration of risks in the intermediaries create financial fragility and …

. Banks have a low cost of capital due to, say, safety nets or money-like liabilities. We show, however, that this can be a … disadvantage, because it exacerbates soft-budget-constraint problems, making it costly to finance innovative projects. Non-banks … capital, solving soft-budget-constraint problems. Still, non-banks never take over the entire market, but coexist with banks …

Japanese stock prices fell, banks' latent capital gains, which are part of tier II capital, became smaller. Empirical findings … are consistent with a view that banks with lower capital ratios tended to issue more subordinated debts (tier II) and to … reduce lending (risk assets) …

universal banks (as opposed to stand alone investment banks) enjoy cost advantages in both lending and underwriting …We investigate how banking relationships that combine lending and underwriting services affect the terms of lending … construct a structural model of lending, which separately identifies loan supply and loan demand. Our approach results in …

focuses, in particular, on the implicit guarantees that governments extend to banks and other financial institutions, which …

that makes risky long-term loans to firms, funded by deposits from savers. Government guarantees create a role for bank …-economic volatility. They redistribute wealth from savers to the owners of banks and non-financial firms. Current capital requirements are …

market. We show that insurance companies, the largest institutional holders of corporate bonds, reach for yield in choosing … their investments. Consistent with lower rated bonds bearing higher capital requirement, insurance firms' prefer to hold … higher rated bonds. However, conditional on credit ratings, insurance portfolios are systematically biased toward higher …

. Empirically, we find that intermediary leverage is negatively aligned with the banks' Value-at-Risk (VaR). Motivated by the …