The following appendices and annexes are available on OVE's Intranet website: http://ove/All about OVE / Docs. Sent to Board. Printed copies are available on request from OVE.

In moral hazard models, bank shareholders have incentives to transfer wealth from the deposit insurer --that is, maximize put option value-by pursuing riskier strategies. For safe banks with large charter value, however, the risk-taking incentive is outweighed by the possibility of losing charter value. Focusing on the relationship between book value, market value, and a risk measure, this pape...

We present a locational model of banking with two types of private banks, honest and opportunistic, and a state bank that is assumed to be less efficient. Opportunistic banks choose whether to honor their contracts with depositors depending on the probability of contract enforcement. We derive three types of equilibria, which depend on institutional quality: a “low” equilibrium in which private...