We analyze the risk-taking behavior of heterogenous intermediaries that are protected by limited liability and choose both their amount of leverage and the risk exposure of their portfolio. Due to the opacity of the financial sector, outside providers of funds cannot distinguish “prudent”...

We analyse the risk-taking behaviour of heterogenous intermediaries that are protected by limited liability and choose both their amount of leverage and the risk exposure of their portfolio. Due the opacity of the financial sector, outside providers of funds cannot distinguishing "prudent"...

Repurchase agreements (repos) are one of the most important sources of funding liquidity for many financial investors and intermediaries. In a repo, some assets are given by a borrower as collateral in exchange of funding. The capital given to the borrower is the market value of the collateral,...

Very low policy rates as well as the substantial redesign of rules and supervisory institutions have changed background conditions for the Euro Area's financial intermediary sector substantially. Both policy initiatives have been targeted at improving societal welfare. And their potential side...