We design a new, implementable capital requirement for large financial institutions (LFIs) that are too big to fail … their derivative contracts, we require that they maintain a capital cushion sufficiently great that their own credit default …

This paper analyses two aspects of banking crises: the choices that banks make to passively roll over loans in default … versus actively pursuing their claims; and choices by regulators to ‘punish’ passive and insolvent banks versus rescuing them …. Banks may choose to roll over loans in order to hide their poor financial conditions or to gamble for resurrection …

are largest for trading-expertise banks with higher capital and in securities with lower rating and long-term maturity. In … reduce lending relative to other banks. This effect is more pronounced for trading-expertise banks with higher capital, and …We analyze securities trading by banks and the associated spillovers to the supply of credit. Empirical analysis has …

where deregulation raises risks in banking. The central bank is assumed to maximize an objective function an argument of … otherwise be the case. Because of restricted entry into banking, deregulation will also call for some inflation. The framework …

This paper analyzes financial institutions' capital allocation decisions when their required equity capital depends on … can be delegated through an economic value added (EVA) compensation contract and solve for the optimal capital allocation … precisely the notion of risk-adjusted return on capital (RAROC) and how it can be used as a performance measure. …

their mortgages, with the consequence of having their homes foreclosed. We model the bailout guarantee as a government … not own homes or had small mortgages, while lowering the welfare of high-income, high-asset households. …

provide capital, and banks, which may take excess risk if they believe the regulator will provide capital. When the regulator … low cost of injecting capital may forbear on bad banks to signal toughness and reduce risk taking, and (ii) A regulator … with a high cost of injecting capital may bail out bad banks to increase confidence and prevent runs. Regulators perform …

(especially in Greece), bad choices with regards to public finances, weak corporate governance within the local banking sector …, inadequate and/or difficult regulation of cross-border banking, worsening competitiveness, and bad political decisions at the …

17 advanced economies since 1870. The new data show that the share of mortgages on banks’ balance sheets doubled in the …