Using data from six OECD countries, we examine the proposition that the costs associated with shareholder–debtholder agency conflicts can be reduced by allowing banks to hold equity in the firms to which they lend. Although the sensitivity of leverage to potential wealth expropriation is...

Previous studies of the relationship between deposit insurance and bank market values have usually been limited to consideration of minor changes in bank regulations, but the 1987 initiation of deposit insurance in Denmark permits examination of a potentially major policy shift. It is found that...

Previous studies of the relationship between deposit insurance and bank market values have usually been limited to consideration of minor changes in bank regulations but the 1987 initiation of deposit insurance in Denmark permits examination of a potentially major policy shift. We find that the...

Interest rate and institutional data from thirteen OECD countries are used to test whether depositors view the provision of deposit insurance and restrictions on permissible bank activities as risk-increasing or -decreasing. On average, the deposit risk premium is 25 basis points lower in...