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We examine the impact of so-called "Crisis Contracts" on bank managers' risktaking incentives and on the probability of … banking crises. Under a Crisis Contract, managers are required to contribute a pre-specified share of their past earnings to … occurs and that leads to a form of collective liability for bank managers. We develop a game-theoretic model of a banking …
Persistent link: https://www.econbiz.de/10010337016
We study the interplay of capital and liquidity regulation in a general equilibrium setting by focusing on future funding risks. The model consists of a banking sector with long-term illiquid investment opportunities that need to be financed by short-term debt and by issuing equity. Reliance on...
Persistent link: https://www.econbiz.de/10014366762