between credit risk and liquidity risk of banks. This interaction is found to make a risk neutral bank behave as if it were … money market destroys endogenous risk aversion and allows banks to manage credit risk and liquidity risk independently. The … separating effect of interbank money markets and recreate endogenous risk aversion of banks. …

This paper studies regulatory competition in the banking sector in a model where banks are heterogeneous and taxpayers … come up for the losses of failing banks. Capital requirements force the weakest banks to exit the market. This gives rise … to a signalling effect of capital standards, as borrowing firms anticipate the higher average quality of banks in a more …

Business cycles imply liquidity risks for banks. This paper explores how these risks influence bank lending over the … cycle. With forward-looking banks, lending cycles, credit booms and busts, or suppressed and highly fragile bank systems can …