their risk assessments and outcomes to those from a simple methodology that relies on publicly available market data and … market data; (iii) This discrepancy arises due to the reliance on regulatory risk weights in determining required levels of … capital once stress-test losses are taken into account. In particular, the continued reliance on regulatory risk weights in …

focus on individual, rather than systemic, risk of financial institutions. Focusing on systemically important assets and … capable of inducing market discipline and mitigating moral hazard, but also capable of addressing the associated systemic risk …, for instance, due to the risk of fire sales of collateral assets. Furthermore, because of our focus on SIALs, our proposed …

their risk assessments and outcomes to those from a simple methodology that relies on publicly available market data and …) This discrepancy arises due to the reliance on regulatory risk weights in determining required levels of capital once … stress-test losses are taken into account. In particular, the continued reliance on regulatory risk weights in stress tests …

individual institutions to the risk in the system. Although the threat index and the default level of a bank both reflect some …

We propose a new theory of systemic risk based on Knightian uncertainty (or "ambiguity"). We show that, due to … pessimistic about other asset classes as well. This means that idiosyncratic risk can create contagion and snowball into systemic … risk. Furthermore, in a Diamond and Dybvig (1983) setting, we show that, surprisingly, uncertainty aversion causes …

I propose a simple theory of intertwined business and financial cycles, where financial regulation both optimally … excessive aggregate lending during a boom. It would also allow for an excessive build-up of risk in the financial sector, which …

. Consistent with such recourse, we find that conduits provided little risk transfer during the "run": losses from conduits …

. This way, one bank's dividend payout policy affects the equity value and risk of default of other banks. When such negative …

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 …