Traditional theory suggests that higher bank profitability (or franchise value) dissuades bank risk-taking. We … highlight an opposite effect: higher profitability loosens bank borrowing constraints. This enables profitable banks to take … risk on a larger scale, inducing risk-taking. This effect is more pronounced when bank leverage constraints are looser, or …

We examine the relationship between the tone of mandatory disclosures and bank risk insolvency to determine what this … qualitative information may reveal about bank stability. By using text analysis and the context-specific text dictionaries of … Loughran and McDonald, we find that qualitative information collected in a negative tone helps explain bank risk insolvency …

In this study, I analyze the heterogeneous dynamics of the bank risk-taking channel of monetary policy under different … environment exhibits heterogeneity across different bank business models. In addition, I find that the heterogeneity lies in the …

management's responsibilities and relevance for a value-maximizing bank. The business nature of financial institutions and their …

Traditional theory suggests that high franchise value limits bank risk-taking incentives. Then why did many banks with … paper attempts to reconcile theory and evidence. We consider a setup where a bank takes risk by levering up, to invest in … risky market-based instruments. High franchise value allows the bank to borrow more, so it can take risk on a larger scale …