In this paper I compare a capital budgeting model of bank lending based on stock valuations to a supply/demand model based on an interest rate channel for France and Germany using non-nested hypothesis tests and omitted variables tests. For France the results of these two statistical tests...

This paper describes an equilibrium macro finance model where contracts are the mechanism by which differentially risk averse bondholders and stockholders resolve a conflict of interest problem and confront the risks associated with future operating decisions and financing decisions of a...

This paper describes a parsimonious macro-finance model where contracts are the mechanism by which differentially risk averse bondholders and stockholders resolve a conflict of interest problem and confront the risks associated with future investment and financing decisions of a representative...

This paper describes the balance sheet adjustments of debt and equity financed firms over the business cycle. A model is developed that describes a representative firm with a stochastic diminishing returns technology and a set of financial contracts that resolves a conflict of interest problem...

What factors cause banks to lend to the private sector in a bank-based financial system like the ones in place in Europe? In this paper we compare a traditional demand oriented model to a non-traditional capital budgeting model of bank lending based on movements in the equity cost of capital for...

The financial and economic crisis of 2007-2011 in the U.S. and Europe raises a number of fundamental questions on the role of banks in the financial system. The response so far has resulted in a reregulation of banks and certain systematically important non-bank financial institutions. One...

This paper formulates and tests a model that describes the asset and financing adjustments of U.S. non-financial enterprises over the twentieth century. Asset adjustments change the expected income and operating risk of firms while financing adjustments change the financial risk. To protect debt...

This article is a review of a 531 page book that in turn is a review and evaluation of the 2,319 page Dodd-Frank Wall Street Reform and Consumer Protection Act passed by Congress on July 16, 2010. The overriding theme of the book is to pose two approaches to attaining financial stability in the...

In this paper we show that in a world where productive investment is allocated according to the CAPM, a fractional reserve banking system that facilitates investing and money creation is not Pareto efficient and leads to excessive productive investment that in turn amplifies future business...

In this paper I compare a capital budgeting model of of bank lending based on stock valuations to a supply/demand model based on an interest rate channel for France and Germany using non-nested hypothesis tests and omitted variables tests. For France both tests indicate a strong rejection of the...