The purpose of the tutorial paper is to present a model to value banks. Three traditional models are summarized briefly first. Next, a ‘fundamental' bank valuation model is introduced. Based on sound economics and finance principles, it allows to identify the various sources of value and to...

A new argument for the Basel III leverage ratio requirement is proposed: the need to limit the risk of a bank run when there is imperfect information on the value of a bank's assets. In addition to screening and monitoring borrowers, banks provide liquidity insurance with the supply of...