We develop a dynamic structural model of bank behaviour that provides a microeconomic foundation for bank capital and …

empirical support. We conclude that bank equity is not socially expensive, and that high leverage at the levels allowed, for …

regulatory liquidity requirements on bank behavior. A multi-stage decision situation allows for considering the interaction … between credit risk and liquidity risk of banks. This interaction is found to make a risk neutral bank behave as if it were …

Does an increase in competition increase or decrease bank stability? I exploit how the state-specific process of … significantly increases bank stability. This result is robust to the inclusion of additional fixed effects and other influences … loans and increases bank profitability. These findings suggest that competition increases stability as it improves bank …

likelihood to issue equity. In contrast to this view, for an international sample of bank Seasoned Equity Offerings (SEOs), we …

regulatory requirements. Our analytic characterization of the bank policy choices shows that imposing solely liquidity … requirements leads to lower bank losses in default at the cost of an increased likelihood of default. Combining liquidity … requirements with leverage requirements reduces drastically both the likelihood of default and the magnitude of bank losses in …