bank issues covered bonds backed by a pool of assets that is bankruptcy remote and replenished following losses …. Encumbering assets allows a bank to raise cheap secured debt and expand profitable investment, but it also concentrates risk on …

idiosyncratic and aggregate shocks. We focus on the role of securitization, whereby borrowers can reduce idiosyncratic asset risk …, which enables increased leverage and investment. In the absence of frictions in the securitization process, we show that the …

banks' dependence on individual bank managers as private information in the lending process declines. In this paper we argue … bank managers and shareholders becomes less severe. Consequently, banks' capital structure needs to be less concerned with … marketability of bank assets allows banks to adopt a safer capital structure, the default risk of banks does not necessarily decline. …