Standard banking theory suggests that there exists an optimal level of credit risk that yields maximum bank profit. We identify the optimal level of risk-weighted assets that maximizes banks’ returns in the full sample of US banks over the period 1996–2011. We find that this optimal level is...

We study the effect of relationship lending on small firms failure probability using a uniquely rich data set comprised of information on individual loans of a large number of small firms in Colombia. We control for firm-specific variables and find that small firms involved in long-term liaisons...

The most recent episode of market turmoil exposed the limitations resulting from the traditional focus on too-big-to-fail institutions within an increasingly systemic-crisis-prone financial system, and encouraged the appearance of the too-connected-to-fail (TCTF) concept. The TCTF concept...

This paper offers a broad introduction to the workings of the global financial system, the dynamics of the main financial markets, the nature and goals of the key financial institutions and the crucial role played by central banks and regulatory agencies. An important part of the paper focuses...

The financial crisis that affected the world market in late 2007 and determinate the failure of some prestigious banks and an unprecedented collapse of the stock market indices had multiple causes and lead to the transformation of the global financial market. To determine the causes that have...

The strategy conceived for a certain type of business takes shape in the form of the business plan. The business plan represents a complex system based on interdependence and which reflects in an accessible manner the idea of business and the evolution of this one in the time. This is a work...

The goal of this paper is to discuss the issues of ethics, moral hazard and behavior in banking regulation of the global financial system. The paper is focused on the specific characteristics of ethical banks, compared with those of traditional ones, and provides a picture of the extent of this...

This paper investigates whether the securitization of corporate bank loans had an impact on the price of corporate debt. Our results suggest that loan facilities that are subsequently securitized are associated with a 15 basis point lower spread than that of loans that are not subsequently...

We study the effects of deposit insurance and observability of previous actions on the emergence of bank runs by means of a controlled laboratory experiment. We consider three depositors in the line of a bank, who decide between withdrawing or keeping their money deposited. We have three...

We study transfers of ownership rights, completed between 1996 and 2004, in five major European countries. We use the traditional literature on corporate governance systems to identify expected groups of countries. Results from the supervised cluster analysis show significant dissimilarities...