Special investment vehicles (SIVs), extremely popular financial structures for the creation of highly-rated tranched securities, experienced spectacular demise in the 2007-2008 financial crisis. These financial vehicles epitomize the shadow banking sector, characterized by high leverage,...

The shadow banking system comprises special purpose vehicles (SPVs) characterized by high debt, illiquid long-maturity assets funded predominantly by short-maturity debt, and tranched liabilities also known as the capital structure of the SPV. These three features lead to an adversarial game...

We investigate the impact of bankruptcy codes on firms' capital-structure choices. We develop a theoretical model to identify how firm characteristics may interact with the bankruptcy code in determining optimal capital structures. A novel and sharp empirical implication emerges from this...