I develop a model where the sovereign debt capacity depends on the capitalization of domestic banks. Low-capital banks … the sovereign risk is sufficiently high, low-capital banks reduce private lending to further increase their holdings of …, in the context of the eurozone periphery, the increase in domestic government bond holdings, the reduction of bank credit …

We develop a model of the joint capital structure decisions of banks and their borrowers. Strikingly high bank leverage … taking by banks, but increased risk taking by firms. Capital regulation lowers bank leverage but can lead to compensating … underlie our structural model, we can quantify the impact capital regulation and other government interventions have on bank …

When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If … asset sales occur at depressed prices, then one bank's sales may impact other banks with common exposures, resulting in … explains how the distribution of bank leverage and risk exposures contributes to a form of systemic risk. We compute bank …

banks, with the bottom 5th percentile experiencing a decline of 20%. We illustrate that uninsured leverage (i.e., Uninsured … them incentives to run. A case study of the recently failed Silicon Valley Bank (SVB) is illustrative. 10 percent of banks … have larger unrecognized losses than those at SVB. Nor was SVB the worst capitalized bank, with 10 percent of banks having …

bank-specific, self-chosen target capital ratio or a very convincing approach to the disentanglement of loan supply and … finance, banking management Decision makers in the fields of capital structure and treasury in banks The Author Hartmut …Monetary policy transmission -- A new view: Implications of financial innovation for the bank lending channel -- Bank …

run. We show that a bank’s survival depends on the market beliefs about the share of uninsured depositors who will … withdraw money following a decline in the market value of bank assets. If interest rate increases are small such that the bank’s … equilibrium) becomes a possibility. Banks with smaller initial capitalization and higher uninsured leverage have a smaller range …