This paper addresses the trade-off between additional loss-absorbing capacity and potentially higher bank risk … increase their risk-taking. This increase in risk-taking however, should be more than outweighed by the benefits of higher …

subject to rollover risk. A bank's optimal borrowing trades off the benefit from investing additional funds into profitable … assets with the cost of greater risk of a run by bank creditors. Changes in the interest rate affect the price and amount of …

expectations about bank risk-taking and demand a return on deposits according to their risk. This creates strategic … alleviating banks’ funding conditions and strengthening risk-taking incentives. Liquidity provision to banks may perpetuate …

European banks. In this paper, we evaluate the possible effects of these constraints on risk and diversification in the … analysis. We then analyse the risk and diversification in the sovereign bond portfolios of the largest European banks and … country. Finally, we evaluate the effect of diversification requirements on the tail risk of sovereign bond portfolios. Under …

reallocation by banks in response to regulatory reform. Simulations highlight a tension between concentration and credit risk in … opportunity set to include an area-wide low-risk asset. By reinvesting into such an asset, banks would reduce both their … concentration and credit risk exposure. …

supervision reduces credit supply to firms with very high ex-ante and ex-post credit risk, while stimulating credit supply to … firms without loan delinquencies. Moreover, the increased risk-sensitivity of credit supply driven by centralised … crucial complementarities between supervision and monetary policy: centralised supervision offsets excessive bank risk …

-term transition scenarios, we document a significant variance among banks in their risk exposure, with the most exposed institutions …

One important source of systemic risk can arise from asset commonality among financial institutions. This indirect … portfolios. In this paper, we propose a new methodology for identifying and assessing banking sector systemic risk stemming from … compute bank portfolio sensitivities to a large number of risk factors (e.g. interest rates, equity prices, credit spreads …

implications of its risk-taking for the wider financial system and real economy. This paper provides empirical evidence for the … existence of widespread risk-taking incentives in the investment fund sector, with a particular focus on incentives for … synchronised, cyclical risk-taking which could have systemic effects. Incentives arise from the positive response of investors to …