equilibrium setting, capital requirements and lobbying contributions are determined as the outcome of bargaining between banks and … politicians. We show that bankers and politicians agree on lobbying contributions and capital regulation that renders banks … capital regulation standards from international agreements eliminate lobbying incentives, yielding an efficient and fair …

We study how bankers can elicit lower capital requirements via lobbying: Bankers pledge to politicians a lobbying rate …-monotonic relationship between the lobbying rate and the likelihood that a crisis occurs. We also predict that the lobbying rate increases … monotonically as political participation rises and/or government guarantees expand. Finally, we suggest that a lobbying tax or …