We investigate capital allocation across a firm's divisions that differ with respect to the degree of asset tangibility. We adopt an incomplete contracting approach where the outcome of potential debt renegotiations depends on the liquidation value of assets. However, with diversity in terms of...

Institut für Halle Institute for Economic Research Wirtschaftsforschung Halle IWH-Diskussionspapiere IWH-Discussion Papers Asset tangibility and capital allocation within multinational corporations Diemo Dietrich April 2006 ...

This paper provides an explanation for the observation that banks hold on average a capital ratio in excess of regulatory requirements. We use a functional approach to banking based on Diamond and Rajan (2001) to demonstrate that banks can use capital ratios as a strategic tool for renegotiating...

In this paper we study interdependencies between corporate foreign investment and the capital structure of banks. By committing to invest predominantly at home, firms can reduce the credit default risk of their lending banks. Therefore, banks can refinance loans to a larger extent through...

Institut für Wirtschaftsforschung Halle Halle Institute for Economic Research Das Institut für Wirtschaftsforschung Halle ist Mitglied der Leibniz-Gemeinschaft Why do banks hold capital in excess of regulatory requirements? A functional approach Diemo Dietrich Uwe Vollmer Juli 2004 Nr....