competitive environment affect bank monitoring choices and the effectiveness of capital regulation? Our approach deviates from the …We assess the influence of competition and capital regulation on the stability of the banking system. We particularly … ask two questions: i) how does capital regulation affect (endogenous) entry; and ii) how do (exogenous) changes in the …

presence of supervision by bank regulators. The model uses a principal-agent setting between a bank's owner and its risk … standard approach subsequent to becoming regulated, i.e., the presence of regulation may induce a bank to decrease the quality … internal rating based approach. The paper considers how a bank's preference for a risk management system is affected by the …

How do near-zero interest rates affect bank competition, risk taking and regulation? I study these questions in a … insurance may induce excessive risk taking. The zero lower bound on deposit rates (ZLB) distorts bank competition and boosts … risk shifting incentives, particularly if rates are expected to remain near-zero for long. At the ZLB, capital regulation …

stylized facts about pre-crisis bank behavior, and suggest implications for the optimal design of capital regulation. …The paper studies risk mitigation associated with capital regulation, in a context when banks may choose tail risk …. A bank with higher capital has lesschance of breaching the ratio, so may actually take more risk. As a result, banks …

system. Whereas the traditional view on regulation focuses on capital as a buffer against exogenous risks, our approach … boundary problem in entity-based financial regulation and provides a motivation for substantially lower levels of leverage …

This paper discusses liquidity regulation when short-term funding enables credit growth but generates negative systemic … incentives for risk creation.When banks differ in credit opportunities, a Pigovian tax on short-term funding is efficient in … containing risk and preserving credit quality, while quantity-based fundingratios are distorsionary. Liquidity buffers are either …