This paper examines the role of macroprudential capital requirements in preventing inefficient credit booms in a model with reputational externalities. Unprofitable banks have strong incentives to invest in risky assets and generate inefficient credit booms when macroeconomic fundamentals are...

If a bank might be too-big-to-fail, then shareholders' optimal compensation contract encourages the executive to risk-shift on to the taxpayer. Standard risk-reducing regulatory compensation rules -- deferred pay, equity-linked pay, debt-like instruments in pay -- do not fully correct for...

This paper develops a model to analyse the optimal ex-ante capital and total loss absorbing capacity (TLAC) requirements, and the ex-post resolution policy of banks. Banks in our model are subject to two types of moral hazard: i) ex-ante, they have the incentive to shirk on project monitoring,...