resilience as indicated by its high-risk exposure and vulnerability. The objective of this paper is to point to policymakers the …. Policymakers should be aware and conversant about risk analysis, risk management, and what policies can best respond to exogenous …

a two-state world, implies that haircuts will adjust to render all lending riskless, and that a loss of risk capital on … default risk is in the form of higher default premia. Further, with high initial leverage, reductions in risk capital decrease …