systemic risk. Equity capital acts as a buffer against losses, and reduces incentives for excessive risk taking. Basel capital … lower capital requirements resulting in excessive risk taking. Furthermore, the bank and the CDS seller (insurer) prefer … high correlation in their returns and jointly shift the risk to the regulator. CDS can be traded at a price higher than its …

We analyze link between mortgage-related regulatory penalties levied on banks and the level of systemic risk in the U ….S. banking industry. We employ a frequency decomposition of volatility spillovers to draw conclusions about system-wide risk … the public, long-term systemic risk among banks tends to increase. In contrast, a settlement with regulatory authorities …

, for the first time, in effect socialised the credit risk of the bank. It is now a fully state-owned bank. Since then …

recurrence of crises reflects a basic procyclicality in the system, which is characterized by a build-up of risk-taking and … leverage in good times and an abrupt withdrawal from risk and an unwinding of leverage in bad times. To deal with the adverse … for risk-taking may be aligned more properly and areas where risk management may be made more robust. Nonetheless a …