This paper studies the extent to which alternative loan loss provisioning regimes affect the procyclicality of the financial system and financial stability. It uses a DSGE model with financial frictions (namely, balance sheet and collateral effects, as well as economies of scope in banking) and...

The effects of capital requirements on risk-taking and welfare are studied in a stochastic overlapping generations model of endogenous growth with banking, limited liability, and government guarantees. Capital producers face a choice between a safe technology and a risky (but socially...

The authors question the significance of the role of moral hazard in the international financial dimension of the Asian crises. They propose an alternative explanation using a testable model and based on results from a qualitative questionnaire of banks. It is more likely that herd behavior and...