Dam, Kaniska; Escrihuela-Villar, Marc; Sánchez-Pagés, … - Departament d'Economia Aplicada, Facultat de Ciències … - 2009
We analyse risk-taking behaviour of banks in the context of spatial competition. Banks mobilise unsecured deposits by offering deposit rates, which they invest either in a prudent or in a gambling asset. Limited liability along with high return of a successful gamble induce moral hazard at the...