perquisites that yield private benefits). The privately optimal level of bank leverage is neither too low nor too high: It … balances efficiently the market discipline imposed by owners of risky debt on managerial rent seeking against the asset … substitution induced at high levels of leverage. However, when correlated bank failures can impose significant social costs …

intermediaries. In this paper, we study the cyclical properties of corporate credit provision through these two types of debt … of the types of financial intermediaries active in the provision of credit. When a debt instrument is held by … institutions that manage their balance sheets through debt issuance, credit provision through that instrument is procyclical. But …

and brokerdealers produce – and are victims of – most of the externalities, leverage and linkages of financial …

With business leverage at record levels, the effects of corporate debt overhang on growth and investment have become a … prominent concern. In this paper, we study the effects of corporate debt overhang based on long-run cross-country data covering … risks either. Yet in line with theory, we find that the economic costs of corporate debt booms rise when inefficient debt …

When a sovereign faces the risk of debt default, it may be tempted to expropriate the private sector. This may be one …