How can tax policy improve financial stability? Recent studies point to large potential stability gains from a reform that eliminates the debt bias in corporate taxation. Such a reform reduces bank leverage. This paper emphasizes a novel, complementary channel: bank risk taking. We model the...

We employ an event study methodology to investigate the stock price reaction around the day of the political decision to include a country-by-country reporting obligation for EU financial institutions. We do not find significant abnormal returns for the banks affected. Sample splits according to...

In a theoretical model of the Diamond-Dybvig style, in which deposit-taking banks and financial markets coexist, bank behavior is analyzed taking into account a positive ex-ante probability of a future financial crisis. We focus on the role of the interaction of market liquidity and banks'...

We explore the effect of tax reforms in Italy and Belgium, respectively that decrease the cost of equity on bank lending. Because local firms were also affected by these reforms, we em-ploy loan level data from the German credit register, to identify the differential impact on lending by banks...

Using fund-, firm- and bank-level data we investigate the investments of private equity (PE) funds in the north-western regions of Italy. Both the private equity fund managers and the PE investments are heavily concentrated in this most developed area of the country. The average size of the...

We study the macroeconomic effects of bank capital requirements in an economy with two banking sectors. Banks are connected through a wholesale funding market. Anticipated banking crises occur endogenously in the form of self-fulfilling wholesale funding rollover crises. Retail bank capital...

The market for external ratings is dominated worldwide as well as in the European Union (EU) by three major credit rating agencies (CRAs). These "Big Three" are Standard & Poor's (S&P), Moody's and Fitch Ratings. Due to the oligopolistic market structure and possible involvement in the 2008...

Using an international sample of more than 65,000 rating actions by Fitch, Moody's and S&P, we analyze the effect of the Dodd-Frank Act on credit ratings. We document that (i) rating report content changes significantly after Dodd-Frank and (ii) show, by exploiting within firm-quarter variation,...