Hughes, Joseph P.; Mester, Loretta J.; Moon, Choon-geol - 2000 - This draft: May 2000
This paper explores how to incorporate banks' capital structure and risk-taking into models of production. In doing so … companies. Modeling the bank's objective as value maximization conveniently incorporates both market-priced risk and expected … on how banks' capital structure and risk-taking is modeled. In particular, when equity capital, in addition to debt, is …