behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks …. This way, one bank's dividend payout policy affects the equity value and risk of default of other banks. When such negative … externalities are strong and bank franchise values are not too low, the private equilibrium can feature excess dividends relative to …

We develop a model of the joint capital structure decisions of banks and their borrowers. Strikingly high bank leverage … emerges naturally from the interplay between two sets of forces. First, seniority and diversification reduce bank asset … underlie our structural model, we can quantify the impact capital regulation and other government interventions have on bank …

hedge to fund drawn credit lines and other commitments. We shed new light on this issue by studying the behavior of bank …

-funded capital injections. However, on closer inspection the composition of bank capital shifted radically from one based on common …

temporary increase in the government protection of non-deposit liabilities and bank assets. In most cases, these guarantees have …

securitized assets using credit guarantees. The credit guarantees were structured to reduce bank capital requirements, while … providing recourse to bank balance sheets for outside investors. Consistent with such recourse, we find that banks with more …