This paper analyzes the effect of the removal of government guarantees on bank risk taking. We exploit the removal of …

mechanisms for bank risk-taking studied in a large partial equilibrium literature. We show that competitive equilibriums maximize … banks is higher than that of banks enjoying monopoly rents, and is robust to the introduction of social costs of bank … failures. In this model, there is no trade-off between bank competition and financial stability …

We show that the impact of government bailouts (liquidity injections) on a representative bank's risk taking depends on … the level of systematic risk of its loans portfolio. In a model where bank's output follows a geometric Brownian motion … and the government guarantees bank's liabilities, we show first that more generous bailouts may or may not induce banks to …

turmoil has thrown up issues for discussion. These include: 1. The scale and scope of deposit insurance; 2. Bank insolvency … regimes, also known as ‘prompt corrective action’; 3. Money market operations by Central Banks; 4. Commercial bank liquidity …

Switzerland. For identification, we compare changes in the behavior of banks that had different fractions of their central bank …

conditions, credit default and bank capitalization for the transmission of macroeconomic shocks. We fit the model to euro area … empirical literature, i.e. the pro-cyclicality of bank profitability and the counter-cyclical response of firm default rates and …