We present a model of cash constrained entrepreneurs who need an investor to finance their project. Investors can either be uninformed, such as individual bondholders, or informed, such as venture capitalists and banks. There is an entrepreneurial moral hazard problem, which can be partially...

The aim of this paper is to analyze the combined effect of both internal and external mechanisms on the performance of thirty European banks. This research uses a technique of panel data over the period 2004 to 2009. The results show that banks conduct trade-offs between different governance...

Banks have been historically the most important kind of financial intermediaries. In Nigeria, they account for more than 60 percent of the market capitalization of quoted firms on the Nigerian Stock Exchange. Even though, there have been many well-known studies on the relationship between...

The crises of 2002 and 2008 have raised the issue of banking sector's ranking system efficiency. The CRAs are crucial for the modern financial market. The impact that the ratings have is indisputable. The paper is seeking to find the factors that affect the ratings and to create a prediction...

The crises of 2002 and 2008 have raised the issue of banking sector's ability to absorb the effects of the crises. The inactivity of banks may be the result of a number of events, such as merger & acquisition (M&A), liquidation, default-bankruptcy, etc. Bankruptcy has been found to be a...

We present a stochastic simulation forecasting model to stress-test banks' capital adequacy and to estimate probability of infringement of regulatory capital ratios and default probability. The stochastic methodology proposed is based on a simplified reduced model that provides a manageable...

We analyze theoretically how financial synergies among bank affiliates affect banks' choice of organizational structure in branches or subsidiaries characterized by different arrangements for internal insurance against affiliates' default. Financial synergies may be generated by reduced default...

This paper analyzes the influence a bank's corporate governance structure has on its risk taking. To do so, the paper specifically looks at illiquidity and insolvency risk, as measured by a bank's liquidity creation and its margin between interest income from loans and interest expenses on...

This study examines the relationship between financial risk and cost behavior both theoretically and empirically. We suggest that financial risk will affect the degree of discretion of managerial resource adjustment decisions by its impacts on financial flexibility and the cost of capital. As...