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The lack of portfolio granularity in terms of exposure has been shown to have important implications for the amount of a financial institution’s economic capital. Based on a numerical simulation model, we provide concrete examples of how granularity affects capital levels. We achieve this by...
Persistent link: https://www.econbiz.de/10012217923
regulation. The firm's capital structure is shown to have a significant effect on regulated prices, so that the firm's choice of …
Persistent link: https://www.econbiz.de/10012235757
We evaluate the role of insider ownership in shaping banks' equity issuances in response to the global financial crisis. We construct a unique dataset on the ownership structure of U.S. banks and their equity issuances and discover that greater insider ownership leads to less equity issuances....
Persistent link: https://www.econbiz.de/10012422173
stablecoin issuers raises the challenge of how to apply technology-neutral regulation so that similar risks are subject to the …
Persistent link: https://www.econbiz.de/10013353383
This paper reviews the cost-benefit analysis, or 'regulatory impact analysis' (RIA), in US bank regulators' risk-based capital (RBC) rule proposals. We review the principles of cost-benefit analysis and its application by US bank regulators. We provide a brief background on RBC rules and review...
Persistent link: https://www.econbiz.de/10012611582
Stablecoins rise to meet the demand for safe assets in decentralized finance. Stablecoin issuers transform risky reserve assets into tokens of stable values, deploying a variety of tactics. To address the questions on the viability of stablecoins, regulations, and the initiatives led by large...
Persistent link: https://www.econbiz.de/10012657966
paper shows that financial regulation can be effective at mitigating this type of risk. Exploiting regulatory changes … financial institutions subject to stricter regulation. Following the easing of these regulations, overconfidence-induced risk …-taking increases again. These findings confirm the effectiveness of financial regulation at correcting overconfident behavior, but also …
Persistent link: https://www.econbiz.de/10014467883
We examine whether the uncertainty related to environmental, social, and governance (ESG) regulation developments is … reflected in asset prices. We proxy the sensitivity of firms to ESG regulation uncertainty by the disparity across the …
Persistent link: https://www.econbiz.de/10014493159
The development of the Basel III leverage ratio does not consider the different risk characteristics of bank business models. All banks have to achieve the same requirements even if a high-risk business model is chosen. For that reason, leverage ratios which are adjusted to the risk-profile of...
Persistent link: https://www.econbiz.de/10014521991
With the introduction of incentive regulation in many network industries, different approaches how to remunerate … invested capital have been used. Under incentive regulation, many regulators remunerate the regulated asset base with a ….e. finding the right balance between equity financing and debt. Taggert (1981) shows that rate-of-return regulation creates an …
Persistent link: https://www.econbiz.de/10010420952