This paper studies the use of information for incentives and risk sharing in agency problems. When the principal is … risk neutral or the outcome is contractible, risk sharing is unnecessary or completely taken care of by a contract on the … outcome is noncontractible, however, the principal has to rely on imperfect information for both incentives and risk sharing …

We provide a theoretical foundation for the claim that prolonged periods of easy monetary conditions increase bank risk … taking. The net effect of a monetary policy change on bank monitoring (an inverse measure of risk taking) depends on the … balance of three forces: interest rate pass-through, risk shifting, and leverage. When banks can adjust their capital …