public disclosure of stress test results, raise funding by promising investors a repayment. We show that competition forces … of bank failure is sufficiently large, the surplus as well. Our results in overall highlight the need to take into …

with a continuum of heterogeneous clients (hedgers). Imperfect competition and (endogenous) default induce a familiar trade …-off between competition and risk. Increasing the number of dealers servicing the market decreases the price paid by hedgers but … more competition. Free-entry is optimal for all level of dealers' efficiency if they can constrain risk-taking by its …

Superintendent of Financial Institutions, which allows us to run simulations of bank valuations and asset prices under a set of …

Minimum capital requirement regulation forces banks to refund a substantial amount of their investments with equity … higher loan interest rates, then borrowers are likely to become more risky, which may destabilize the lending bank. This … paper argues that, in addition to the buffer and cost effect of capital regulation, there is a strategic effect. A binding …