regular core capital requirement that helps deter excessive risk-taking incentives. The second tier, a novel aspect of our … framework, is a special capital account that limits risk taking but preserves creditors' monitoring incentives. -- capital …, but also create perverse incentives for banks to engage in correlated asset choices and to hold little equity capital. As …

hedge to fund drawn credit lines and other commitments. We shed new light on this issue by studying the behavior of bank …

hedge to fund drawn credit lines and other commitments. We shed new light on this issue by studying the behavior of bank …

capitalized. We employ a set of headline facts about the build-up of such risk exposures to explain how and why LCFIs adopted this … in decades preceding the current one, allowing LCFIs to take on excessive systemic risk. We also examine alternative … banking, excess liquidity due to global imbalances and mispricing of risk due to behavioral biases have some merit as …

We present a simple model of systemic risk and show how each financial institution’s contribution to systemic risk can … empirically the ability of components of SES to predict emerging systemic risk during the nancial crisis of 2007-2009. …