This paper studies a dynamic version of the Holmstrom-Tirole model of intermediated finance. I show that competitive equilibria are not constrained efficient when the economy experiences a financial crisis. A pecuniary externality entails that banks' desire to accumulate capital over time...

This paper extends the analysis of Junge and Kugler (2013) on the effects of increased capital requirements on Swiss GDP and obtains the following main results: First the Modigliani-Miller effect is robust with respect to a substantial extension of the data base and yields an offset of capital...

This paper exploits the federal preemption of national banks in 2004 from local laws against predatory lending to gauge the effect of the supply of credit on the real economy. First, the preemption regulation resulted in an 11% increase in annual lending in the 2004-2006 period, which is...

Are banks of wide scope better intermediaries? Using the variation in bank scope generated by the stepwise repeal of the Glass-Steagall Act in the U.S. and the subsequent rise of universal banking, we provide evidence that economies of scope in concurrent lending and underwriting improve the...

The euro area's sovereign debt crisis continues though significant steps have been taken to resolve it. This paper proposes a comprehensive solution to the crisis based on three pillars: a plan to restore banking sector soundness in the whole euro area, a resolution of sovereign debt crisis...

It has been an age-old debate whether the financial structure matters for the real economy’s efficiency and therefore for real outcomes. We suppose that varying socioeconomic conditions require appropriately designed corresponding financial sectors. For providing evidence, we firstly determine...