We analyze theoretically banks’ choice of organizational structures in branches or subsidiaries in the presence of government bailouts, default costs and - possibly - economies of scale as sources of financial synergies. We compare with stand-alone banks. Subsidiary and branch structures...

Our paper provides a complete characterization of leverage and default in binomial economies with financial assets serving as collateral. Our Binomial No-Default Theorem states that any equilibrium is equivalent (in real allocations and prices) to another equilibrium in which there is no...

Our paper provides a complete characterization of leverage and default in binomial economies with financial assets serving as collateral. First, our Binomial No-Default Theorem states that any equilibrium is equivalent (in real allocations and prices) to another equilibrium in which there is no...