institution’s credit worthiness and the return on its market value, and importantly, on the level and quality of capital … subprime crisis and the Euro Area sovereign debt crisis—have also been key drivers of the sharp rise in bank funding costs … steps taken to increase resilience, notably higher capitalization. Our results suggest increased capital buffers may …

Agent-Based Model with Capital and Credit (hereafter CC-MABM). The novelty of this model with respect to the previous … framework consists in the introduction of capital goods that firms producing consumption goods (C-firms) purchase from capital … goods producers (K-firms). The introduction of durability (in the form of capital which depreciates gradually) has important …