Showing 1 - 10 of 61
Persistent link: https://www.econbiz.de/10005478107
Banks offering credit to borrowers are faced with uncertainty about their creditworthiness. If banks obtain information about borrowers after lending to them, they are able to reject riskier borrowers when refinancing. Potential entrant banks will face an adverse-selection problem stemming from...
Persistent link: https://www.econbiz.de/10005133348
Persistent link: https://www.econbiz.de/10005362887
Persistent link: https://www.econbiz.de/10002979546
Persistent link: https://www.econbiz.de/10008859048
Persistent link: https://www.econbiz.de/10012000901
Persistent link: https://www.econbiz.de/10011622353
This paper presents a model of bank risk taking and government guarantees. Levered banks take excessive risk, as their actions are not fully priced at the margin by debt holders. The impact of government guarantees on bank risk taking depends critically on the portion of bank investors that can...
Persistent link: https://www.econbiz.de/10012246440
Persistent link: https://www.econbiz.de/10012435301
Do low interest rate environments lead to greater bank risk-taking? We show that, when banks can adjust their capital structures, reductions in real interest rates lead to greater leverage and higher risk for any downward sloping loan demand function. However, if the capital structure is fixed,...
Persistent link: https://www.econbiz.de/10011042980