{"id":924,"date":"2017-12-03T14:41:02","date_gmt":"2017-12-03T12:41:02","guid":{"rendered":"http:\/\/www.christophbertsch.com\/?p=924"},"modified":"2017-12-16T19:08:22","modified_gmt":"2017-12-16T17:08:22","slug":"revised-version-of-a-fire-sale-bank-recapitalizations","status":"publish","type":"post","link":"https:\/\/www.christophbertsch.com\/?p=924","title":{"rendered":"Revised version of &#8220;Fire Sale Bank Recapitalizations&#8221;"},"content":{"rendered":"<p><strong><a title=\"Optimal Bank Capitalization in Crowded Markets\" href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=2667636\" target=\"_blank\">&#8220;Optimal Bank Capitalization in Crowded Markets\u201d<\/a><\/strong> with <a title=\"Mike Mariathasan's homepage\" href=\"http:\/\/sites.google.com\/site\/mikemariathasan\/\" target=\"_blank\">Mike Mariathasan (KU Leuven)<\/a><br \/>\n(This version: 08\/2017; First version: 09\/2015; <a title=\"Optimal Bank Capitalization in Crowded Markets\" href=\"https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=2667636\" target=\"_blank\"><em>Sveriges Riksbank Working Paper No. 312<\/em><\/a>)<\/p>\n<ul>\n<li>Abstract:<\/li>\n<\/ul>\n<div class=\"page\" title=\"Page 1\">\n<div class=\"layoutArea\">\n<div class=\"column\">\n<p>We study banks\u2019 optimal equity buffer in general equilibrium, as well as their ex-post response to under-capitalization. Developing a \u201cpecking order theory\u201d for private recapitalizations, our benchmark model identifies equity issuance as individually and socially optimal, compared to deleveraging, and conditions that invert the individually optimal ranking. Ex-ante, the imperfectly elastic supply of capital, incomplete insurance markets and costly bankruptcies give rise to inefficiently high capital shortfalls and excessive insolvencies. Abstracting from moral hazard and informational asymmetries, we therefore provide a novel rationale for macroprudential capital regulation emerges and a new set of testable implications about banks\u2019 capital structure management.\n<\/p><\/div>\n<\/div>\n<\/div>\n<ul>\n<li>Keywords: bank capital, macroprudential regulation, incomplete markets, financial market segmentation, constrained inefficiency.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Optimal Bank Capitalization in Crowded Markets\u201d with Mike Mariathasan (KU Leuven) (This version: 08\/2017; First version: 09\/2015; Sveriges Riksbank Working Paper No. 312) Abstract: We study banks\u2019 optimal equity buffer in general equilibrium, as well as their ex-post response to &hellip; <a href=\"https:\/\/www.christophbertsch.com\/?p=924\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,69,45,12,46,27,47,68],"tags":[],"class_list":["post-924","post","type-post","status-publish","format-standard","hentry","category-academic-research","category-bank-stress-tests","category-capital-regulation","category-finance-banking","category-fire-sales","category-leverage","category-macroprudential-policy","category-recapitalization-strategy"],"_links":{"self":[{"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=\/wp\/v2\/posts\/924","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=924"}],"version-history":[{"count":8,"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=\/wp\/v2\/posts\/924\/revisions"}],"predecessor-version":[{"id":944,"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=\/wp\/v2\/posts\/924\/revisions\/944"}],"wp:attachment":[{"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=924"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=924"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.christophbertsch.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=924"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}