/or risk taking and that this leads to higher expected losses for its depositors. To reduce the adverse effects of moral hazard …, policy measures have to be taken. However, a simple leverage ratio is likely to increase expected losses further and risk … adjusted capital requirements do not necessarily affect highly leveraged banks with very low risk assets. A combination of both …

high-powered incentives and, hence, a high personal income at the merger-management stage. We derive conditions under which …