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We examine the relationship between leverage and the weighted-average cost of capital (WACC) for U.S. banks. Ignoring tax effects, leverage appears to have virtually no impact on the WACCs of too-big-to-fail banks. We find significant differences in this relationship across different...
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optimal dynamic control problem is characterized by two stochastic state variables: the equity value, and profitability (ROA …) of the _rm. According to the empirical evidence, we let profitability follow a mean reverting process. The problem is …
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the impact of five selected determinants - profitability, asset structure, non-debt tax shield, GDP growth rate, inflation … and the World Bank database covers the period 2009-2017. Correlation analysis and GMM methods are used to detect the …
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