The topic of bank default risk in connection with government bailouts has recently attracted a great deal of attention. In this paper, the question of how a bank’s default risk is affected by a distress acquisition is investigated. Specifically, the government provides a bailout program of...

In this paper, we develop a contingent claim model to evaluate a bank’s equity and liabilities that integrates the premature default risk conditions with loan rate-setting behavioral mode and multiple shadow banking activities under capital regulation. The barrier options theory of corporate...

When only short-term loans are available, innovative firms may become more reluctant to invest in long-term and highly risky investment projects (i.e., radical innovation). By exploiting the unique situation in China that patenting firms for the first time obtained patent-backed loans (PBLs),...