underlying mechanisms differ. The tax shield incentivises debt financing as it reduces tax payments to the government. The …Systemically important banks are subject to at least two departures from the neutrality of debt versus equity financing …: the tax deductibility of interest payments and implicit funding subsidies. This paper fills a gap in the literature by …

leverage and product-market competition as predictors of financial distress hazard; and lack of attention to frailty as a … a managerial effort problem, mitigated by leverage and product-market competition as substitute disciplining devices … effect of leverage on financial distress hazard is inverted-U-shaped; (ii) the effect of the competition is U-shaped; and …

This paper investigates how the asset-return variance risk premium changes leverage. I find that the premium lowers … leverage by increasing risk-neutral bankruptcy probability and costs in a model where asset returns have stochastic variance … with risk premium. Empirically, the model calibrations verify significant reduction in optimal leverage, closer to observed …

composition (equity vs. bail-in debt) is driven by the relative importance of two incentive problems: risk shifting (mitigated by … equity) and private benefit taking (mitigated by debt). Our quantitative results suggest that TLAC size in line with current … regulation is appropriate. However, an important fraction of it should consist of bail-in debt because such buffer size makes the …

activities. For this purpose, I propose a novel measure of synthetic leverage, which can be estimated based on publicly available … information. In the empirical application, I show that German equity funds have increased their risk-taking via synthetic leverage …

incentives of bank levies to reduce leverage turn ineffective. Thus, bank levies can counteract the debt bias of taxation only …Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes … funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending …