We develop a model of the joint capital structure decisions of banks and their borrowers. Strikingly high bank leverage … emerges naturally from the interplay between two sets of forces. First, seniority and diversification reduce bank asset … and fragility. Deposit insurance and the expectation of government bailouts increase not only bank risk taking, but also …

We investigate the effect of managerial incentives and market power on bank risk-taking for a sample of 212 large US … bank holding companies over 1997-2004 (i.e. 1,534 observations). Bank managers have incentives to prefer less risk while … bank shareholders have preference for ‘excessive' risk. Likewise, the market power is the centre piece of any bank …

We investigate the effects of managerial incentives and market power on bank risk-taking for a sample of 212 large U ….S. bank holding companies over the period 1997-2004 (comprising 1,534 observations). Bank managers have incentives to prefer … less risk, while bank shareholders prefer higher risk, and market power is the centerpiece of any bank regulation. However …

We present a model where bank assets are a portfolio of risky debt claims and analyze stockholders' risk …-taking behavior while considering the strategic interaction between debtors and creditors. We find that: (1) as the leverage of a bank … demonstrates that an increase in comovement of a loan portfolio increases the bank's cost of default directly, we find that the …

Bank's (2013) database covering various aspects of bank regulation. Using multiple explorative factor analysis, we identify …

because it reflects special liquidity benefits of bank debt. Even aside from neglecting the systemic damage to the economy …

it reflects special liquidity benefits of bank debt. Even aside from neglecting the systemic damage to the economy that …

channel, one bank's capital policy affects the equity value and risk of default of other banks. In a model where such … externalities are strong, bank capital takes on the attribute of a public good, where the private equilibrium features excessive … implications of the model with observed bank behavior during the crisis of 2007-09 …

This paper investigates regulations for a bank that is covered by deposit insurance in a dynamic setting where … bankruptcy entails social costs. Regulatory policy operates through rules governing the bank's capital structure and asset … allocation that may be adjusted each period. Throughout, the regulator must take into account that the bank is better informed …