We explore Lithuanian credit register data and two bank closures to provide a novel estimate of firms' bank-switching costs and a novel identification of the hold-up problem. We show that when a distressed bank's closure forced firms to switch, these firms started borrowing at lower interest...

Many emerging markets have undertaken significant financial sector reforms especially in their banking sectors that have been quite critical for both financial development and real economic activity. In this paper, we investigate the success of banking reforms in India where significant banking...

This empirical examination of the effect of rollover risk on default risk uses a database of U.S. industrial firms during 1986-2011. This article represents the most comprehensive empirical study to date to support the existence of a rollover risk effect on default risk. This paper investigates...

Given the importance attached to sound liquidity management in the banking industry, this paper investigates the effect of bank liquidity on profitability. The study employs the bankruptcy cost and risk-return hypotheses to examine the linear effect of bank liquidity on bank profit. Annual...

This paper presents a continuous-time bank capital structure model in which the bank's assets are subject to both diffusion and tail risk. The latter causes uninsured deposits to be risky, as the bank's assets can jump below the threshold at which it is optimal for depositors to run. The model...

We present a new approach to test the financial distress costs theory of corporate hedging empirically. We estimate the ex ante expected financial distress costs, which serve as a starting point to construct further explanatory variables in an equilibrium setting, as a fraction of the value of...

What is the joint impact of different resolution regimes and capital requirements on the optimal liability structure of a bank holding insured deposits and issuing non-bail-inable debt and bail-inable Tier1-capital debt? We address this novel question and find that: 1) a credible bail-in...

Bank plays a vital role in the economy due to the function play by bank as financial intermediaries that link both surplus unit and deficit unit. As bank also has a control over the supply of the money, bank is known to be one of the stimuli that can stimulate the economic development of the...

The banking sector around the world has undergone significant changes in its environment, resulting on its performance on significant impact. The bank plays an important role in the economy because of the function play by the bank as a financial intermediary linking both units of surplus and...

How should shareholders make dividend and recapitalization policies for a bank when there exists execution delay and fix costs on recapitalizations? What is the optimal time and magnitude of recapitalization if the magnitude of recapitalization is pre-determined at the time of...