Central bank policy suffers from time-inconsistency when facing a banking crisis : A bailout is optimal ex post but ex … reputation for the central bank are high, monitoring effort by the banker is important in improving returns, and when the cost of …

-out guarantee. The reason is that the prospect of a bail-out induces the protected bank to expand, thereby intensifying competition … in the deposit market and depressing other banks? margins. In contrast, the effects on the protected bank?s risk …

the model. Independent empirical work provides support for the theory. …

During the last decade or so a number of banking crises has occurred in both industrial and developing countries. Bank … discussion of financial crises and bank runs, the paper discusses the prototype case of banks for which both established economic …

of the government to service its liabilities. Apart from the externality problem of bank recapitalization, the paper …

In this paper, we argue for a regulatory framework under which a bank’s required level of equity capital depends on the … regulatory framework. In addition, we argue that banking-on-the-average rules ensure the build-up of bank equity capitals in …

Ongoing financial innovation and greater information availability increase the tradability of bank assets and reduce … banks' dependence on individual bank managers as private information in the lending process declines. In this paper we argue … bank managers and shareholders becomes less severe. Consequently, banks' capital structure needs to be less concerned with …