We develop a dynamic model of banking to assess the effects of liquidity and leverage requirements on banks' insolvency … risk. In this model, banks face taxation, flotation costs of securities, and default costs and maximize shareholder value … regulatory requirements. Our analytic characterization of the bank policy choices shows that imposing solely liquidity …

banks' liabilities thereby decreasing the cost of equity relative to the cost of debt. Using a difference …-in-differences approach we assess the impact of this tax levy on banks' participation in the syndicated loan market. We further investigate … the impact of the tax levy along bank size and capital structure. We find that banks located in countries where the tax …

, not defined in a market, but by the collateral frameworks and interest rate policies of central banks. Using the … on financial markets and the wider economy. They can, for example, bias the private provision of real liquidity and …

In this paper, we examine the relationship between banks lobbying activities, their size, financial strength, and … sources of income. First, we find that banks are more likely to lobby when they are larger, have more vulnerable balance … sheets, are less creditworthy, and have more diversified business profiles. We also find that banks engaged in non …

Evidence suggests that banks tend to lend a lot during booms, and very little during recessions. We propose a simple … that are characteristic of modern banks' activities. The first ingredient is moral hazard: banks are supposed to monitor … multiple of the banks' own capital. The second ingredient is the banks' high exposure to aggregate shocks: banks' assets have …

lending. In our model commercial banks finance their loans with deposits and equity, while facing equity issuance costs …. Because of this financial friction, banks build equity buffers to absorb negative shocks. Aggregate bank capital determines … competitive equilibrium is constrained inefficient, because banks do not internalize the consequences of individual lending …

U.S. banks have increasingly diversified into activities traditionally considered as non-core for the banking sector …. This paper investigates whether diversification influences banks' investment (credit) policy and profitability. Diversified … banks appear to benefit from “coinsurance,” supply more credit, and seem more profitable. However, diversification does not …

This paper provides evidence on how the new international regulation on Global Systemically Important Banks (G …-SIBs) impacts the market value of large banks. We analyze the stock price reactions for the 300 largest banks from 52 countries … value of the newly regulated banks, yet that the official designation of banks as “globally systemically important” itself …

This paper examines the quality of credit ratings assigned to banks in Europe and the United States by the three …, and define a new ordinal metric of rating error based on banks' expected default frequencies. Our results suggest that … rating agencies assign more positive ratings to large banks and to those institutions more likely to provide the rating …