Bank capital structure and credit decisions
نویسندگان
چکیده
منابع مشابه
Bank capital structure and credit decisions
This paper argues that banks must be sufficiently levered to have first-best incentives to make new risky loans. This result, which is at odds with the notion that leverage invariably leads to excessive risk taking, derives from two key premises that focus squarely on the role of banks as informed lenders. First, banks finance projects that they do not own, which implies that they cannot extrac...
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In this paper we show that bank competition has an intrinsically ambiguous impact on capital accumulation. We further show that it is also responsible for the emergence of development traps in economies that otherwise would be characterized by unique equilibria. These results explain the conflicting evidence emerging from the recent empirical studies of the effects of bank competition on econom...
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A firm partially financed by debt is considered. The firm is subject to two types of shocks: macro-shocks modeled as a finite state Markov chain, and idiosyncratic shocks. The dynamics of the latter may depend on the state of the macroeconomy; the state of the economy is determined not only by fundamentals but the market sentiment as well. The lenders are competitive and debt is rolled over unt...
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ژورنال
عنوان ژورنال: Journal of Financial Intermediation
سال: 2008
ISSN: 1042-9573
DOI: 10.1016/j.jfi.2008.02.006