of capital from cash flow and discount rate news in bank stock returns, we show that the lower returns do not suggest … evidence points to the nontrivial role of investors' inefficient forecasts of expected bank risk and fundamentals …

a decrease in bank equity risk. We show theoretically, that keeping less capital in excess of the minimum capital … capitalization is a significant determinant of equity risk, and can explain why bank equity risk has not become lower after the Great …, reduced the cost of bank debt …