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Risk sensitivity of banks, interbank markets and the effects of liquidity regulation : conference paper

Pausch, Thilo - 2013 - First draft

The industrial organization approach to banking is extended to analyze the effects of interbank market activity and … risk averse in an environment where there is no interbank market and liquidity regulation. Introducing a buoyant interbank … separating effect of interbank money markets and recreate endogenous risk aversion of banks. …

Persistent link: https://www.econbiz.de/10010344667

Risk-Shifting, Regulation and Government Assistance

Sharma, Padma - 2019

This paper examines an episode when policy response to a financial crisis effectively incentivized financial institutions to reallocate their portfolios toward safe assets. Following a shift to a regime of enhanced regulation and scaled-down public assistance during the Savings and Loans (S&L)...

Persistent link: https://www.econbiz.de/10012858621

Determinants for using visible reserves in German banks: an empirical study

Bornemann, Sven; Homölle, Susanne; Hubensack, Carsten; … - 2009

The German Commercial Code (HGB) allows banks to build visible reserves for general banking risks according to section 340g HGB. These GBR reserves may, in addition to their risk provisioning function, be used to enhance capital endowment, for internal financing, signaling or earnings management...

Persistent link: https://www.econbiz.de/10010299259

The impact of public guarantees on bank risk taking : evidence from a natural experiment

Gropp, Reint; Gruendl, Christian; Guettler, Andre - 2010

In 2001, government guarantees for savings banks in Germany were removed following a law suit. We use this natural experiment to examine the effect of government guarantees on bank risk taking, using a large data set of matched bank/borrower information. The results suggest that banks whose...

Persistent link: https://www.econbiz.de/10008746580

The ex-ante versus ex-post effect of public guarantees

Damar, Evren; Gropp, Reint; Mordel, Adi - 2012

In October 2006, Dominion Bond Rating Service (DBRS) introduced new ratings for banks that account for the potential of government support. The rating changes are not a reflection of any changes in the respective banks' credit fundamentals. We use this natural experiment to evaluate the...

Persistent link: https://www.econbiz.de/10009580069

Corporate governance of financial institutions

Mehran, Hamid; Mollineaux, Lindsay - 2012 - Revised February 2012

We identify the tension created by the dual demands of financial institutions to be value-maximizing entities that also serve the public interest. We highlight the importance of information in addressing the public's desire for banks to be safe yet innovative. Regulators can choose several...

Persistent link: https://www.econbiz.de/10009521658

Debt overhang and capital regulation

Admati, Anat R.; DeMarzo, Peter M.; Hellwig, Martin; … - 2012

We analyze shareholders' incentives to change the leverage of a firm that has already borrowed substantially. As a result of debt overhang, shareholders have incentives to resist reductions in leverage that make the remaining debt safer. This resistance is present even without any government...

Persistent link: https://www.econbiz.de/10009528814

The political economy of financial systems

Haber, Stephen H.; Perotti, Enrico C. - 2008

This survey reviews the literature on the political economy of financial structure, broadly defined to include the size of capital markets and banking systems as well as the distribution of access to external finance across firms.The theoretical literature on the institutional basis for...

Persistent link: https://www.econbiz.de/10011374399

New bank equity capital rules in the European Union : a critical evaluation

Schuster, Thomas; Kövener, Felix; Matthes, Jürgen - 2013

This paper presents and critically evaluates the bank capital requirement rules proposed by the European Union - the capital requirements directive CRD IV and the capital requirements regulation CRR. First, the rules of the Basel III accord about equity capital standards of banks are briefly...

Persistent link: https://www.econbiz.de/10009730618

Fallacies, irrelevant facts, and myths in the discussion of capital regulation : why bank equity is not socially expensive

Admati, Anat R.; DeMarzo, Peter M.; Hellwig, Martin; … - 2013

We examine the pervasive view that "equity is expensive" which leads to claims that high capital requirements are costly for society and would affect credit markets adversely. We find that arguments made to support this view are fallacious, irrelevant to the policy debate by confusing private...

Persistent link: https://www.econbiz.de/10010203632

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