Download (268kB).pdf

MPRA_paper_826.pdf
Preview of Download (268kB)
🔗 Source: mpra.ub.uni-muenchen.de
📊 Size: 305 KB
👤 Author: Rafael Repullo
⬇️ Downloads: 79

Summary

The bank chooses its liquidity buffer and loan portfolio risk, subject to a capital requirement. The results show that the equilibrium choice of risk decreases with the capital requirement and increases with the interest rate charged by the LLR. When the LLR does not charge penalty rates, the bank chooses the same level of risk and a smaller liquidity buffer than without an LLR, contradicting the common view that an LLR increases risk-taking incentives. Penalty rates, however, do increase the bank's risk-taking.

Description

The bank chooses its liquidity buffer and loan portfolio risk, subject to a capital requirement.

Technical Information

  • File Format: PDF
  • File Size: 305 KB
  • Pages: 35
  • Language: EN
  • Author: Rafael Repullo
  • Total Downloads: 79
  • Last Updated: 1 week ago

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