credit risk. Assuming that both bank-specific liquidity shocks and credit losses are necessary to provoke bank runs, the … model predicts that a bank’s incentives to mitigate its credit risk by screening decrease if the probability of a bank …In this paper, I develop a model that addresses the links between banks’ liquidity outlook and their incentives to take …

justified. We model bonuses as a series of sequential call options on profits and show that they provide higher risk … no robust relationship between risk-taking incentives and US banks' stock returns during the global financial crisis. The …

We model a banker's future bonuses as a series of call options on the bank's profits and show that bonus caps and … deferrals reduce risk-taking. However, the banker's optimal risk-taking also depends on the costs of risk-taking. We calibrate …, whereas capping the bonus at the level of the base salary substantially reduces the bankers’ risk-taking. Our results suggest …

This paper analyses bank exit (ie reorganisation and liquidation) legislation in selected financial centres: New York …, London, Frankfurt, Helsinki and Tokyo. The focus is on bank exit legislation applicable to commercial banks. The legislation … is analysed from the perspective of bank stakeholders, ie bank creditors, depositors and bank shareholders. The analysis …

This paper evaluates bank exit regimes in selected financial centres using econometric methods. The focus is on bank … exit regimes applicable to commercial banks in New York, London, Frankfurt, Helsinki and Tokyo in 1998–2002. Bank exit … regimes are studied from the perspective of bank creditors and bank shareholders. In order to apply econometric methods, the …

In this paper, by employing a novel approach, we study the relationship between bank type and small-business lending in … a post-transition country. Using a unique dataset on bank branches and firm-level data, we find that local cooperative … domestic banks. Our results are important from a policy perspective, as they show that foreign bank entry and industry …

project success fluctuate. Some model versions challenge the classic findings of Bester (1985) by showing that high-risk … borrowers may in such case be more willing to pledge collateral than low-risk borrowers. Abundant collateral then would not … signal low risk. The results may help explain the mixed empirical findings on the role of collateral. The paper also extends …

of social externalities of bank failures further lowers the optimal level of transparency. Moreover, asset risk taking …Consider a competitive bank whose illiquid asset portfolio is funded by short-term debt that has to be refinanced … on refinancing risk, it is negative given the risk associated with the asset, but ambiguous if one accounts for its …

-destroying actions to benefit themselves, but may also encourage banks to lower asset risk. It shows that subdebt regulation and bank …This paper demonstrates that subordinated debt (‘subdebt’ thereafter) regulation can be an effective mechanism for … disciplining banks. Under our proposal, investors buy the subdebt of a bank only if they receive favourable information about the …