, a bank is able to reduce the cost of debt by splitting it into a junior and a senior tranche, sold to institutional and …

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 …

We develop a model of the joint capital structure decisions of banks and their borrowers. Strikingly high bank leverage … emerges naturally from the interplay between two sets of forces. First, seniority and diversification reduce bank asset … and fragility. Deposit insurance and the expectation of government bailouts increase not only bank risk taking, but also …

This paper investigates bank portfolio composition under Basel II where the amount of required capital is determined by … bank's own risk assessment. We particularly show that in presence of asymmetric information between the bank and the …

Bank's (2013) database covering various aspects of bank regulation. Using multiple explorative factor analysis, we identify …

endogenously varies while the regulations are exogenously imposed. I propose a banking model to investigate how the changes in bank … light on how bank equity and Basel III regulations affect credit and money creation …