In this paper, we provide an overview of the concerns surrounding the variations in the calculation of risk … actual and perceived problems with RWAs, and improve the use of risk-sensitive capital ratios. …

We consider a moral hazard economy in banks and production to study how incentives for risk taking are affected by the … quality of supervision. We show that low interest rates may generate excessive risk taking. Because of a pecuniary externality … a constraint on asset allocation. We show that the political process tends to exacerbate excessive risk taking and …

mindful of how undercapitalization can create incentives to take on excessive risk. This study proposes a novel framework for … capital regulation that addresses banks' incentives to take on excessive risk and leverage. The framework consists of a … design, this special account thus limits risk taking, but ensures that creditors' disciplining incentives are preserved. …

United Kingdom - are more promising while still entailing significant implementation challenges. A risk factor common to all … of the financial system. Since this could lead to accumulation of systemic risk if left unchecked, it appears unlikely …

This paper develops a model to assess how monetary policy rates affect bank risk-taking. In the model, a reduction in … the risk-free rate increases lending profitability by reducing funding costs and increasing the surplus the monopolistic … the bank to take excessive leverage and hence risk. Excessive risk-taking increases as the interest rate decreases. At a …