We develop a model of banking industry dynamics to study the quantitative impact of capital requirements on bank risk … taking, commercial bank failure, and market structure. We propose a market structure where big, dominant banks interact with … banks' buffer stocks of securities. We test the model using business cycle properties and the bank lending channel across …

bank risk taking, commercial bank failure, interest rates on loans, and market structure. We propose a market structure … addition to aggregate shocks to the fraction of performing loans in their portfolio. A nontrivial bank size distribution arises … consistent with untargeted business cycle properties, the bank lending channel, and empirical studies of the role of …

This study develops a multi-period structural model to value bank subordinated debt (subdebt) under different … risks, bank characteristics and regulatory policies affect subdebt prices and yield spreads. It finds that the … have the opposite effects. Also, subdebt spreads are less sensitive to bank risk when PCA is imposed than when capital …