We analyze a model where investors (e.g., hedge funds) need to borrow from lenders with heterogeneous risk-exposures and risk-management motives. Investors may obtain advantageous terms of borrowing by disclosing their investment strategy, thereby revealing its correlation to the lender’s existing risk exposure. Investors risk being ‘‘front-run’’ by their lender if they disclose, however. We sh...

This paper analyzes the efficiency of the Brazilian banking sector over the post-privatization period of 2000-2007. We employ a Bayesian stochastic frontier approach, which provides exact efficiency estimates and confidence intervals and thus, allows an accurate comparison across institutions and bank groups. The results suggest that large banks are the most cost and profit efficient, supportin...

The paper has three purposes. First, it explains how the impact of liberalization of service sectors on output growth differs from that of liberalization of trade in goods. Second, it suggests a policy-based rather than outcome-based measure of the openness of a country’s services regime. Such openness measures are constructed for two key service sectors, basic telecommunications and financial ...

This paper evaluates (1) whether the exogenous component of "nancial intermediary development in#uences economic growth and (2) whether cross-country di!erences in legal and accounting systems (e.g., creditor rights, contract enforcement, and accounting standards) explain di!erences in the level of "nancial development. Using both traditional cross-section, instrumental variable procedures and ...

We calculate abnormal stock returns for Japanese non-financial companies around major events associated with the banking crisis (1995–2000), and find that not all companies were equally sensitive to the malaise of the banking sector: the most affected were small, leveraged, low-tech companies with low credit ratings and low market to book ratios. This is consistent with ‘‘credit crunch’’ theori...

This paper addresses the impact of dynamic risk management on bank risk taking. We show that when banks earn rents only from deposit insurance and can engage in risk management it is no longer in their interests to maximize risk; instead, they moderate their risk to increase their chances of survival. The paper also shows that the opportunity for risk management may change the impact of capital...

We analyze the impact of capital adequacy regulation on bank insolvency and aggregate investment. We develop a model of the banking system that is characterized by the interaction of many heterogeneous banks with the real sector, interbank credit relations as a consequence of bank liquidity management and an insolvency mechanism. This allows us to study the impact of capital adequacy regulation...

In attempting to promote bank stability, the Basel Committee on Banking Supervision (2006) provides a framework that seeks to control the amount of tail risk that large banks take in their trading books. However, banks around the world suffered sizeable trading losses during the recent crisis. Due to the size and prevalence of losses, a formal examination of whether the Basel framework allows b...

Article history: Received 30 May 2011 Received in revised form 7 November 2011 Accepted 20 December 2011 Available online 29 December 2011 We investigate bank risk taking, efficiency and their relation to law enforcement using a unique sample of 133 Chinese city commercial banks across 31 regions for the 1999–2008 period. We find that stronger law enforcement tends to promote greater bank risk ...

Two Bacillus subtilis tRNA(His) precursors (Green, C. J., and Vold, B. S. (1988) J. Biol. Chem. 263, 652-657) were processed by Escherichia coli RNase P in the presence of varying [Mg2+]. The wild type precursor was processed under all conditions to afford a single tRNA product containing 8 base pairs in the acceptor stem. In contrast, the position of processing of a mutant tRNA(His) precursor ...