Rescue packages adopted to stabilize the banking system are generally divided into three categories: government purchases of distressed assets, government guaranteed debt issuance programs, and direct equity capital injections. Countries afflicted by the recent financial crisis launched general...

The main purpose of this paper is to model bank spread behavior under capital regulation and deposit insurance. Comparative static results show that an increase in the capital-to-deposits ratio or the deposit insurance decreases the bank's interest margin or spread. It is also shown that an...