This paper investigates the incentives for banks to bias their internally generated risk estimates. We are able to … by low-capital banks to improve regulatory ratios. At the portfolio level, the difference in borrower probability of … credits. In addition, we find that low-capital banks' risk estimates have less explanatory power than those of high …

Historically, nonfinancial corporations relied on performance targets linked to their EPS. Up until the 1970s, banks … explaining banks' market values. In this paper we present a model of a bank with fixed-rate deposit insurance that faces …

This paper investigates the incentives for banks to bias their internally generated risk estimates. We are able to … by low-capital banks to improve regulatory ratios. At the portfolio level, the difference in borrower probability of … credits. In addition, we find that low-capital banks' risk estimates have less explanatory power than those of high …

Historically, nonfinancial corporations relied on performance targets linked to their EPS. Up until the 1970s, banks … explaining banks' market values. In this paper we present a model of a bank with fixed-rate deposit insurance that faces …

also stronger among non-local or more-distant banks, who have a diminished ability to monitor local borrower adherence to …

The Basel I Accord introduced a discontinuity in required capital for undrawn credit commitments. While banks had to …, both undrawn fees and spreads went up. These results are robust and confirm that banks act to conserve regulatory capital …

When supervisors have imperfect information about the soundness of banks, they may be unaware of insolvency problems … that develop in the interval between on-site examinations. Supervising banks more often will alleviate this problem but … supervision and their need to monitor banks effectively. We first characterize the optimal supervisory policy, in terms of the …

The Basel I Accord introduced a discontinuity in required capital for undrawn credit commitments. While banks had to …, both undrawn fees and spreads went up. These results are robust and confirm that banks act to conserve regulatory capital …

insurer the authority to close banks and by having last resort lending insured, one gives the deposit insurer strong …