The capital structure and regulation of financial intermediary firms are important topics for regulators and academic researchers. In general, theory predicts that firms choose their capital structures by balancing the benefits of debt against its costs. The purpose of this paper is to analyze capital structure as a function of bank's specific variable factors. It examines the relationship ...

Nowadays, the widespread connections among national and international organizations and industries make crisis in one area distress other organizations. One of the sensitive industries is banking industry, which has faced fundamental changes due to the various economic and political crisis in the last decade. Alterations such as exchange rates fluctuations, bankruptcy of unorganized institution...

This paper provides an account of the origins and structure of the Finnish system of financial regulations which was prevalent in the post-war decades until the deregulation of the 1980s. Despite considerable macroeconomic volatility, the banking sector in Finland was remarkably stable. There were no significant bank failures over this period of more than 40 years, and credit losses were of no ...

We establish a fundamental relationship between the return on the banking sector’s assets and each banker’s willingness to supply liabilities that facilitate payments and settlement (private money). In particular, we show that the regulation of lending practices is necessary for the optimal provision of private money. In an environment in which bankers cannot commit to their promises, an unregu...

Recently, a large unregulated ”shadow banking”, based on counterparty relations, flourished and then suddenly collapsed. In the absence of regulation, its existence hinges on confidence about counterparties’ good behavior, and such confidence hinges on counterparties’ reputation concerns. Even when reputation allows for a cheaper alternative to traditional banking – by saving on regulatory cost...