two ideas that have been analysed separately in previous work: some authors argue that due to risk-shifting, debt …

are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads … are negatively related to the ``exogenous'' component of cash holdings that is independent of credit risk factors …, suggesting that precautionary savings are central to understanding the effects of cash on credit risk. …

small default risk. Our model explains why markets for rollover debt, such as asset-backed commercial paper, may experience …

We develop a dynamic model to assess the effects of liquidity and leverage requirements on banks' insolvency risk. The …. Using the model, we show that liquidity requirements have no long-run effects on default risk but may increase it in the … short-run; leverage requirements reduce default risk but may significantly reduce bank value; mispriced deposit insurance …

a larger debt capacity and bears lower credit risk premia than privately held debt. We derive simple closed …