Bank leverage ratios have made an impressive and largely unopposed return; they are mostly used alongside risk-weighted capital requirements. The reasons for this return are manifold, and they are not limited to the fact that bank equity levels in the wake of the global financial crisis (GFC)...

The level of household debt had already exceeded the threshold level in 2002 and began to exercise contractionary impact on consumption, jeopardizing the prospects for a sustained recovery. Given that a sizable number of households are now credit constrained, and that the maturity structure of...

We show that systemic risk in the banking sector breeds macroeconomic uncertainty. We develop a model of a production economy with a banking sector where financial constraints of banks can lead to disastrous banking panics. We find that a higher probability of a banking panic increases...