Is it really possible to control for the downside risk when the market environment is in constant evolution? If so … variance and correlation terms are properly taken into account, downside risk can be mitigated without compromising long …

The effects of capital requirements on risk-taking and welfare are studied in a stochastic overlapping generations … between a safe technology and a risky (but socially inefficient) technology, and bank risk-taking is endogenous. Setting the … capital adequacy ratio above a structural threshold can eliminate the equilibrium with risky loans (and thus inefficient risk …