applications of our theory. We first show that predictions of our model provide a novel theoretical justification and are … theory of debt versus equity. Third, we provide conditions under which permanent over- or under-pricing of assets is …

contributed to higher asset prices through increased use of collateralisation, which allows risk-neutral investors to realise … perceived gains from trade. Investors with lower risk perceptions buy collateralised loans, whose downside-risk they perceive as … small. Investors with higher risk perceptions buy upside-risk through asset purchase and collateralised loan issuance …

phenomenon based on trading constraints and asymmetric information. A key feature of our theory is that rational uninformed …

. We show that elementary results in auction theory can fully account for some stylized facts on asset returns that have … assumptions underlying auction theory. …

literature that tries to explain the first stylized fact ignores the second. This paper provides a unified theory that reconciles …

This paper studies the impact of competition on the determination of interest rates, and on banks’ risk taking … lower entry costs foster competition in deposit rates and reduce banks’ incentives to limit risk exposure. While higher … insurance coverage amplifies this effect, two alternative arrangements (risk based contributions to the deposit insurance fund …