I investigate the impact of bank capital requirements in a business cycle model with corporate debt choice. Compared to … non-bank investors, banks provide restructurable loans that reduce firm bankruptcy losses and enhance production … efficiency. Raising capital requirements eliminates deposit insurance distortions but also deposit tax shields. As a result …

deposit insurance distortions but reduces bank debt supply. The model calibrated to the U.S. economy suggests that the non-bank …This paper proposes a macro-banking model with corporate debt choice and investigates the impacts of bank capital …

because it reflects special liquidity benefits of bank debt. Even aside from neglecting the systemic damage to the economy … funding mix entails costs to society, such regulation actually helps create useful commitment for banks to avoid the …

it reflects special liquidity benefits of bank debt. Even aside from neglecting the systemic damage to the economy that … entails costs to society, such regulation actually helps create useful commitment for banks to avoid the inefficiently high …