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The goal of this paper is to estimate a dynamic model of a bank to explain how bank bailouts exacerbate moral hazard …. In the model, a bank makes an endogenous choice of the risks of its investments and can finance these investments by … deposits and risky debt. I estimate nine model parameters that characterize a bank's behavior. For the full sample of U …
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We develop a quantitative equilibrium model of financial crises to assess the interaction between ex-post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the...
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The paper evaluates the impact of macroprudential capital regulation on bank capital, risk taking behaviour, and … solvency. The identification relies on an exogenous policy change in bank-level capital requirements across systemically …
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