This paper explores how to incorporate banks' capital structure and risk-taking into models of production. In doing so … companies. Modeling the bank's objective as value maximization conveniently incorporates both market-priced risk and expected … on how banks' capital structure and risk-taking is modeled. In particular, when equity capital, in addition to debt, is …

cost minimization to a more general assumption of managerial utility maximization that can incorporate risk incentives into … between the risk-incentives literature in banking that ignores the microeconomics of production and the production literature … that ignores the relationship between production decisions and risk. …