, which enables increased leverage and investment. In the absence of frictions in the securitization process, we show that the … be constrained inefficient due to the existence of a pecuniary externality that can result in over or under-investment …. We examine policies to correct over-investment and find that a leverage ratio restriction generates a Pareto improvement …

access to the public debt market face decreased leverage and investment, accompanied by decreased bank debt, compared to … determining debt and investment and that bank-dependent firms faced more underinvestment or uncertainty after the financial crisis …