Every commercial bank optimises its asset portfolio depending on the profitability of assets and chosen or imposed constraints. This paper proposes and applies a stylized model for optimising banks' asset and liability structure, reflecting profitability of different asset categories and their risks as well as costs associated with different liability categories and reserve requirements. The le...

I compare welfare generated by a credit contract with individual liability and a contract with joint liability. The problem is credit rationing caused by limited liability and unobservable investment decisions. Joint liability induces borrowers to monitor each other, however the lender can also monitor. I show that wealthier borrowers may prefer riskier investments when liability is joint, whic...

Banks may well perform differently in lending to firms according to their funding structure. This paper surveys the relation between Loan volatility and deposit in Iranian banking system. The extent to which bank lending is connected to funding structure is affected by the banks’ characteristics (such as capital structure, profitability, and the measure of non-performing loans). To analyze this...

according to the iranian law, the international conventions should be passed by iranian parliament (majlis) and then confirmed by the guardian council for ensuring that they are constitutional and in conformity with islamic rules. the montreal convention for the unification of certain rules for international carriage by air is a significant advance over the warsaw system. in this article, we ...

The Portuguese Constitution, in article 22, instituted the general principle of tort liability of the State and other public law entities. Consequently, ordinary legislation established the tort liability of the State into the Portuguese Legal Order, by means of Decree-Law 48051, of 1967. This decree, which was criticised extensively, was amended by virtue of Law 67/2007, of 31 December, establ...

Since the fiduciary duty of bank management is to maximize bank value and not social welfare, we analytically solve for the liability structure that maximizes the value of a bank leveraged by deposits and subordinated debt. Our analysis offers a perspective on privately-rational bank capital structure and its interaction with regulatory environment. Absent deposit insurance and regulatory closu...

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...