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The present paper is devoted to the study of a bank salvage model with a finite time horizon that is subjected to stochastic impulse controls. In our model, the bank’s default time is a completely inaccessible random quantity generating its own filtration, then reflecting the unpredictability...
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leverage ratios after their lending banks are involved in M&As, by increasing bond finance to more than compensate a reduction … in bank loans. Consistent with the hedging motive for cash holdings à la Acharya et al. (2007), the increase in leverage …
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