significantly influencing the risk-taking attitudes of bank managers. Particularly, we intend to substantiate the theory that banks … banking sectors due to a missing ability to monitor bank managers. Our results underline that these problems appear to mislead … bank managers showing an unreasonable risk-taking behavior. In a first stage, we rely on a theoretical model explaining …

analysis is relevant to the debate on bank capital regulation, and complements Admati et al. (2010). In that paper we argued … subsidies, the effects of leverage reduction on bank managers or shareholders do not represent a social cost. In fact, we show … to leverage reduction leads to social inefficiencies. The main beneficiaries from high leverage may be bank managers. The …