This paper investigates the incentives for banks to bias their internally generated risk estimates. We are able to … by low-capital banks to improve regulatory ratios. At the portfolio level, the difference in borrower probability of … credits. In addition, we find that low-capital banks' risk estimates have less explanatory power than those of high …

We examine liquidity creation per unit of assets by banks subject to the Liquidity Coverage Ratio (LCR) using the …. We find that, since 2013, there has been reduced liquidity creation by LCR banks compared to non-LCR banks, occurring …-off between lower liquidity creation and lower run risk from reduced liquidity mismatch of the largest banks. …

We estimate the cost of capital for the banking industry and find that while the cost of capital soared for banks in … the financial crisis, after the passage of the Dodd-Frank Act, the value-weighted cost of capital for banks fell … differentially more than did the cost of capital for nonbanks. The very largest banks drive the decline in expected returns. Over a …

Historically, nonfinancial corporations relied on performance targets linked to their EPS. Up until the 1970s, banks … explaining banks' market values. In this paper we present a model of a bank with fixed-rate deposit insurance that faces …

This paper examines market liquidity in the post-crisis era, in light of concerns that regulatory changes might have … reduced banks' ability and willingness to make markets. We begin with a discussion of the broader trading environment … considering plausible alternative drivers of market liquidity. Using both high- and low-frequency data on U.S. Treasury securities …

The Federal Home Loan Bank (FHLB) System is a large, complex, and understudied government-sponsored liquidity facility … that currently has more than $1 trillion in secured loans outstanding, mostly to commercial banks and thrifts. In this … about the respective roles of the various liquidity facilities would be helpful. …

financial market conditions deteriorated, large losses accumulated, and emergency capital and liquidity were being provided by …

and state U.S. banking regulators and provides basic facts on worker flows between the regulatory and private sectors … higher gross outflows into the private sector during booms. These worker flows are also driven by state-specific banking … conditions as measured by local banks' profitability, asset quality, and failure rates. The regulatory sector seems to experience …

Pierret (2015) presents empirical analysis of the solvency-liquidity nexus for the banking system, documenting that a … shock to the level of banks' solvency risk is followed by lower short-term debt. Conversely, higher short-term debt Granger …-causes higher solvency risk. These results point toward a tight interaction between solvency and liquidity risk over time. My …