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 indeed...

Considerable debate within academia and the banking community continues to focus on the role of fixed rate deposit insurance. In particular, some argue that mispriced deposit insurance creates further incentives for bank stockholders to take on additional risk. While previous studies of the...

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 indeed...