We develop a dynamic model of a BHC that encompasses both a trading desk and a loan desk, and explore the role of risk attitude and overleveraging by the trading desk. We trace the impact of monetary policy and market innovations on bank behavior in the presence of Basel III type regulations. We...

Money, which provides liquidity, is distinct from debt. The introduction of a bank that issues money in exchange for debt and pays out its profit as dividend to shareholders modifies the model of overlapping generations. Monetary policy can set, alternatively, the nominal rate of interest or the...

Men of finance raised funds for loans, asientos, to Philip II by trading short-term financial instruments in credit markets and by selling long-term annuities, juros. These activities are illustrated by an asiento with the Maluenda brothers (July 13, 1595), where short-term credit secured by the...

In a financial market where agents trade for short-term profit and where news can increase the uncertainty of the public belief, there are strategic complementarities in the acquisition of private information and, if the cost of information is sufficiently small, a continuum of equilibrium...