Jeitschko, Thomas D; Jeung, Shin Dong - In: The IUP Journal of Bank Management VII (2008) 2, pp. 7-31
The conventional wisdom is that well-capitalized banks are less inclined to increase asset risk, because the option value of deposit insurance decreases with capitalization. There are, however, at least three shortcomings in the existing theories that cast doubt on the validity of the...