This paper analyzes the relationship between banks’ divergent strategies toward specialization and diversification of … financial activities and their ability to withstand a banking sector crash. We first generate market-based measures of banks … probability of a sharp decline in a bank’s stock price conditional on a crash in a banking index. Subsequently, the impact of (the …

This paper analyzes the relationship between banks’ divergent strategies toward specialization and diversification of … financial activities and their ability to withstand a banking sector crash. We first generate market-based measures of banks … probability of a sharp decline in a bank’s stock price conditional on a crash in a banking index. Subsequently, the impact of (the …

Countries differ on the extent to which their financial system relies on banks or on the financial market. We offer a …

equilibrium setting, capital requirements and lobbying contributions are determined as the outcome of bargaining between banks and … politicians. We show that bankers and politicians agree on lobbying contributions and capital regulation that renders banks …

the banking industry was under capital regulation. Using the panel data of commercial banks in the USA and non-USA from … theory. In addition, for banks with low capital adequacy ratio, capital and risk adjustment are negatively correlated. This … applies to the verification of bankruptcy cost avoidance theory and managerial risk aversion theory. Finally, banks with lower …

identify the effect of higher capital requirements by comparing the change in the outcome for banks just above and below the … discontinuity and on a difference-in-differences matching design. We find that, when parent banks are constrained with higher … effect by reducing banks' risk-taking while having a (temporary) adverse impact on the real economy through a decrease in …

European and U.S. banks. The robust results show that a softening of foreign monetary policy increases the supply of credit of … foreign banks to Mexican firms. Each regional policy shock mainly affects supply via their respective banks, in turn implying …

characterized by fire sale externalities. In the model, banks can insure against potential liquidity shocks by hoarding sufficient …. Banks, not internalizing the fire sale externality, overinvest in the risky asset and underinvest in the liquid asset in the … reducing risky assets -- however, we show that banks respond to stricter capital requirements by decreasing their liquidity …

The study derives the closed-form solution of the valuation of deposit insurance under forbearance for banks whose …