This paper reviews the theoretical literature on bank capital regulation and analyzes some of
the approaches to redesigning the 1988 Basel Accord on capital standards. The paper starts …

The second edition of an essential text on the microeconomic foundations of banking
surveys the latest research in banking theory, with new material that covers recent …

In a dynamic model of moral hazard, competition can undermine prudent bank behavior.
While capital-requirement regulation can induce prudent behavior, the policy yields Pareto …

Capital requirements are the cornerstone of modern bank regulation, yet little is known
about their welfare cost. This paper measures this cost and finds that it is surprisingly large. I …

This paper tests cross-sectional differences in the effectiveness of the bank lending channel.
The results, derived from a comprehensive sample of Italian banks, suggest that …

This report examines the precise nature of the required institutional reforms needed to
achieve higher sustained rates of growth and to make a dent in poverty reduction and …

This paper surveys the theory of banking regulation from the general perspective of
regulatory theory. Starting by considering the different justifications of financial …

We show that in an imperfect information environment the equity value of an impaired bank
may increase or decrease when it is required to meet a capital standard. Regardless of the …

We analyze risk‐sensitive, incentive‐compatible deposit insurance in the presence of
private information and moral hazard. Without deposit‐linked subsidies it is impossible to …

We develop a dynamic model of banking to assess the effects of liquidity and leverage
requirements on banks' financing decisions and insolvency risk. In this model, banks face …