that the full risk sharing equilibrium may not require much diversification of equity portfolios when there is price …

There is a widespread view that bank capital requirements should be loosened during recessions and tightened during … capital requirement policies on the saving decisions of households, and, through this channel, on bank loans and output. We …

We study the welfare properties of a New Keynesian monetary economy with an essential role for risky bank lending …. Banks lend funds deposited by households to a financial accelerator sector, and face penalties for maintaining insufficient … net worth. The loan contract specifies an unconditional lending rate, which implies that banks can make loan losses. Their …

of the traditional bank business model. Specialized providers of financial services can chip away activities that do not … rely on access to balance sheets, while platforms can interject themselves between banks and customers. We discuss …

banks can extract market power rents. We show that more bank competition results in lower economy-wide risk, lower bank … allocation and optimal levels of bank risk and capitalization. These results are at variance with those obtained by a large …

We model an economy in which domestic banks and firms face incentive constraints, as in Holmstrom and Tirole (1997 …). Firms borrow from banks and uninformed investors, and can collude with banks to reduce the intensity of monitoring. We study … banks. We find that liberalization of capital flows may deteriorate the governance of the domestic financial system by …