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To test if safety nets create moral hazard in the banking industry, we develop a simultaneous structural two-equations model that specifies the probability of a bailout and banks' risk taking.We identify the effect of expected bailout probabilities on risk taking using exclusion restrictions...
Persistent link: https://www.econbiz.de/10010306612
The recent global financial crisis has intensified calls to make the financial sector less crisis-prone, and to this end to make impairment recognition rules for debt instruments more forward looking. To better understand the behavior of different impairment rules and their potential effect on...
Persistent link: https://www.econbiz.de/10014162862
Hub-and-spoke regulation, where a central regulator with legal power over firms delegates monitoring to local supervisors, can improve information collection, but can also lead to agency problems and capture. We document that following the closure of a US bank regulator's field offices, the...
Persistent link: https://www.econbiz.de/10012967849
Bank competition and financial stability is a recurrent research issue, and researchers have begun to shed light on the competition effect on systemic-risk. Japan is an interesting case in this venue since its regional banking system has confronted intensified competition and there is growing...
Persistent link: https://www.econbiz.de/10012893314
This paper documents large cross-country variation in the relationship between bank competition and bank stability and explores market, regulatory and institutional features that can explain this variation. We show that an increase in competition will have a larger impact on banks' fragility in...
Persistent link: https://www.econbiz.de/10013114400
This paper documents large cross-country variation in the relationship between bank competition and bank stability and explores market, regulatory and institutional features that can explain this variation. We show that an increase in competition will have a larger impact on banks' fragility in...
Persistent link: https://www.econbiz.de/10013115499
The recent financial crisis has forced a rethink of banking regulation and supervision and the role of financial innovation. This paper develops a model where prudent banks may signal their type through high capital ratios. Capital regulation may ensure separation in equilibrium, but deposit...
Persistent link: https://www.econbiz.de/10013112749
To test if safety nets create moral hazard in the banking industry, we develop a simultaneous structural two-equations model that specifies the probability of a bailout and banks’ risk taking.We identify the effect of expected bailout probabilities on risk taking using exclusion restrictions...
Persistent link: https://www.econbiz.de/10009270009
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance...
Persistent link: https://www.econbiz.de/10011898938
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance...
Persistent link: https://www.econbiz.de/10011903207