This paper investigates the relation between bank capital and profitability. To my knowledge, no previous paper has analysed this problem in a two-equation structural model. Contrary to what is reported with surprising frequency in this field of research, the results show no statistically...

The orthodox assumption in the banking literature is that capital requirements are a binding constraint on banking behavior. This is in conflict with the empirical observation that banks hold a buffer of capital well in excess of the minimum requirements. This paper develops a model where...

Political uncertainty leads to greater information asymmetry among contracting parties to the firm, resulting in an increased demand for accounting conservatism. Exploiting the exogenous variation in political uncertainty induced by the U.S. gubernatorial election cycle over the period...

Do people “vote with their feet” in response to a lack of political competition? Since political competition is associated with higher growth and welfare, with the free movement of labour, we argue that it should also encourage inward migration. We test this hypothesis by using data from the...

We examine how liquidity in the equity market affects bank lending costs. An exogenous decrease in liquidity during the SEC Tick Size Pilot Program raises corporate bank borrowing costs; an effect that reverses when the program ends. We find similar results in a broad panel of firms using both...

The orthodox assumption in the banking literature is that capital requirements are a binding constraint on banking behaviour. This is in conflict with the empirical observation that banks hold a bu¤er of capital well in excess of the minimum requirements. This paper develops a model where...

We document a positive association between political uncertainty and accounting conservatism. In the year prior to a U.S. presidential election, on average, accounting conservatism increases by nearly 20 percent. This election year effect is stronger when the election is closer, when the...

We examine changes to corporate ownership in nine East Asian countries following the 1997 Asian Financial Crisis. Countries with lower incomes and in which policy making involves greater transactions costs (i.e., veto points) have more firms with state ownership. Partial state ownership appears...