Capital allocation frameworks play an important role in large financial institutions for risk management and performance measurement. These frameworks are predominately developed by practitioners and undergo continuous change. Instead of using economic capital, banks rely for the allocation of...

I examine the relationship between credit default swap spreads and implied cost of equity. These two empirically observable measures are surrogates for the larger concepts cost of debt and cost of equity. Using a sample of quarterly observations from 2004-2012 for 93 firms contained in the...