Macroprudential policies since the global financial crisis have been central to safeguarding financial stability. Despite the increasing use of multiple policy instruments, a detailed understanding of interactions among them is still needed to assess how instrument combinations can enhance the...

In most countries, banks' equity holdings in firms that borrow from then are rather small.In light of the theoretical literature, this is somewhat surprising.For example, according to agency cost models, allowing banks to hold equity would seem to alleviate firms' asset substitution moral hazard...