Financing as a supply chain: The capital structure of banks and borrowers
We develop a model of the joint capital structure decisions of banks and their borrowers. Bank leverage of 85% or higher emerges because bank seniority both dramatically reduces bank asset volatility and incentivizes risk-taking by producing a skewed return distribution. Nonfinancial firms choose lo...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier B.V.
2018
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| Subjects: | |
| Online Access: | View Fulltext in Publisher |