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bank’s failure risk solely by means of liquidity requirements. However, their effectiveness can be restored if, in addition …
Persistent link: https://www.econbiz.de/10003973628
Consider a competitive bank whose illiquid asset portfolio is funded by short-term debt that has to be refinanced … of social externalities of bank failures further lowers the optimal level of transparency. Moreover, asset risk taking …
Persistent link: https://www.econbiz.de/10013037132
Persistent link: https://www.econbiz.de/10001820963
This paper focuses on the consequences of cross-border banking and entry of multi-national banks (MNBs) for banking supervision and regulation. When a MNB expands internationally with subsidiaries, the MNB operates under the legislation of several countries - both the home country and the host...
Persistent link: https://www.econbiz.de/10011508005
The regulatory framework of Basel III features joint requirements on bank capital and liquidity. I study such … requirements by developing a general equilibrium model with bank runs in a global game framework. The model highlights the role of … noisy information for studying liquidity and shows that bank runs are inevitable. Risk shifting induces excessive leverage …
Persistent link: https://www.econbiz.de/10012852107
The paper analyzes a very stylized model of crises and demonstrates how the degree of strategic complementarity in the actions of investors is a critical determinant of fragility. It is shown how the balance sheet composition of a financial intermediary, parameters of the information structure...
Persistent link: https://www.econbiz.de/10009230899
This is a draft of the first half of an open access textbook on game theory. I hope to complete the entire book by the … end of 2015. After teaching game theory (at both the undergraduate and graduate level) at the University of California … theory and there is hardly any need for a new one. However, there are two distinguishing features of this textbook: (1) it is …
Persistent link: https://www.econbiz.de/10011429960
We analyze the strategic interaction between undercapitalized banks and a supervisor who may intervene by preventive recapitalization. Supervisory forbearance emerges because political and fiscal costs undermine supervisors' commitment to intervene. When supervisors have lower credibility,...
Persistent link: https://www.econbiz.de/10012301221
intermediate socially optimal level of bank competition. We provide a novel theory of bank opacity. The cost of opacity is more … runs, and face a threat of entry. Higher competition increases deposit rates and bank fragility, resulting in an … is to deter entry of competitors, which increases bank charter value. Banks can be excessively opaque, motivating …
Persistent link: https://www.econbiz.de/10013329652
Persistent link: https://www.econbiz.de/10001567410