Regulatory taxes, investment, and financing decision for insured banks

Anlong Li, Peter H. Ritchken, L. Sankarasubramanian and James Thomson

No 9303, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: An investigation of the effects of interest rate and credit risk on optimal capital structure and investment decisions. The authors show that with no uncertainty in interest rates, capital regulation will reduce the risk of the bank's assets, but that under interest rate uncertainty, the impact of regulation may be detrimental and raise the risk of the deposits as well as government subsidies to the bank's shareholders.

Keywords: Bank capital; Deposit insurance (search for similar items in EconPapers)
Date: 1993
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Working Paper: Regulatory taxes, investment and financing decisions for insured banks (1995)
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