Showing 1 - 10 of 62
This paper shows that bonus contracts may arise endogenously as a response to agency problems within banks, and analyzes how compensation schemes change in reaction to anticipated bailouts. If there is a risk‐shifting problem, bailout expectations lead to steeper bonus schemes and even more...
Persistent link: https://www.econbiz.de/10011006016
In the recent financial crisis, risk management tools have been proven inadequate. Model risk, a key component of bank risk, has shown its negative impact. It seems that risk models did not cover the included risks comprehensively and were not kept up-to-date by banks, and also rating agencies....
Persistent link: https://www.econbiz.de/10010957996
One explanation for the poor performance of regulation in the recent financial crisis is that regulators had been captured by the financial sector. We present a micro-founded model with rational agents in which banks may capture regulators due to their high degree of sophistication. Banks can...
Persistent link: https://www.econbiz.de/10010958106
The explicit or implicit protection of banks through government bail-out policies is a universal phenomenon. We analyze the competitive effects of such policies in two models with different degrees of transparency in the banking sector. Our main result is that the bail-out policy unambiguously...
Persistent link: https://www.econbiz.de/10005248528
Persistent link: https://www.econbiz.de/10005362491
Is the reputation of a firm tradable when the change in ownership is observable? We consider a competitive market in which a share of owners must retire in each period. New owners bid for the firms that are for sale. Customers learn the owner's type, which reflects the quality of the good or...
Persistent link: https://www.econbiz.de/10005379505
Money markets have two functions, the allocation of liquidity and the processing of information. We develop a model that allows us to evaluate the efficiency of different money market derivatives regarding these two objectives. We assume that due to its size, a large bank receives a more precise...
Persistent link: https://www.econbiz.de/10005082808
The long-run evolution of per-capita income exhibits a structural break often associated with the Industrial Revolution. We follow Mokyr (2002) and embed the idea that this structural break reflects a regime switch in the evolution of technological knowledge into a dynamic framework, using Airy...
Persistent link: https://www.econbiz.de/10005150938
This article empirically investigates the competitive effects of government bail-out policies. We construct a measure of bail-out perceptions by using rating information. From there, we construct the market shares of insured competitor banks for any given bank, and analyze the impact of this...
Persistent link: https://www.econbiz.de/10010534977
Research can be carried out in academia, or in the private sector, or as a mixture, for example as privately funded academic research. We develop a theoretical framework in which private research funding (PRF) transfers information about the value of a research project from the private sector...
Persistent link: https://www.econbiz.de/10009358498