Making Bank: Why High Bank Leverage is Optimal For the Bank's Shareholders
نویسندگان
چکیده
منابع مشابه
Bank Management between Shareholders and Regulators
This essay discusses the corporate governance of banks. Bank managers must balance competing demands from shareholders and regulators, which distinguishes banks from most other firms. The essay is structured into three parts. The theoretical section first broadly defines management and its governance as a process with certain built-in ambiguities that defy a strict notion of accountability. The...
متن کاملCould making banks hold only liquid assets induce bank runs?
Restrictions placed on bank portfolios are analyzed in a banking model designed to capture the role of checking accounts in facilitating transactions. Forcing banks to hold only liquid assets creates the incentive for liquidity-based runs. Even when a run does not occur, welfare is reduced as a result of overinvestment in the liquid asset. & 2010 Elsevier B.V. All rights reserved.
متن کاملBank Leverage Regulation and Macroeconomic Dynamics
Regulatory constraints on bank leverage have been at the center of many policy discussions recently. One important question to emerge from these discussions has been whether these regulations should be time-dependent and how they would interact with the business cycle. We analyze this question using a dynamic stochastic general equilibrium model with banks and bank capital. In the model, bank c...
متن کاملBank Size, Leverage, and Financial Downturns
I construct a macroeconomic model with a financial sector in which the severity of financial downturns depends on size differences in the banking sector and average bank leverage. In my model, a more concentrated banking sector deepens and prolongs financial downturns for two reasons: returns on assets decrease more, and banks sharply decrease the liquidity supply in the interbank market. Calib...
متن کاملOptimal Bank Liability Structure
We develop a model of capital and liability structure of banks that optimally respond to changes of regulatory environment. The model produces the following results. In the absence of regulation, banks in our model take high leverage, both in the form of deposits and subordinated debt. We find that subordinated debt is important in banks’ liability structure—holding zero subordinated debt is ne...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2015
ISSN: 1556-5068
DOI: 10.2139/ssrn.2647274