Universal banks can have control over borrowers by holding equity stakes in the borrower firm. Banks’ corporate control is likely to increase the likelihood of providing a future loan as they mitigate information asymmetry and agency costs of debt. Using panel data on Portuguese companies, we...

In this study, an assessment of the impact of Basel II capital requirement rules driven by credit risk of non-financial firms is performed. Intervals of variation for the risk drivers are established such that capital requirements for firms' credit risk under Basel II exceed capital requirements...

This work aims to study the hypothesis of lower capitalization of banks under the risk-based rules introduced in Basel II. In this sense, an assessment of the impact of these rules on the capital requirements for non-financial firms' credit risk is performed. A comparison with Basel I is...

In the framework of incomplete markets, due to the non-existence of trade at some points in time, and using a partial equilibrium analysis, we show how the bid-ask spread of an European derivative is generated. We also find conditons for the existence of the spread. These conditions concern the...