The dissertation investigates the impact of a non-risk-weighted leverage ratio on the stability of financial institutions. We calculate leverage ratios (LR) and estimate probabilities of default (PD) and find a significant positive relationship between LR and PD. This might be explained by the...

We outline analytically that when testing different implied cost of capital (ICC) measures for validation by employing the Vuolteenaho (2002) framework, the cash-flow news in the validation framework should be defined in a way that considers the model specific assumed sequence of future cash...