Assembled writings on excessive indebtedness, or leverage, in the financial sector and capital regulation, or the regulation of the funding mix, of banks and other financial firms.
The pieces are aimed at multiple audiences and vary in length and presumed knowledge on the part of readers.
To make these pages useful, we first describe the main writings and relate them to one another, then provide a page with links to additional pieces grouped by topic.
The Leverage Ratchet Effect
Firms’ inability to commit to future funding choices has profound consequences for capital structure dynamics. With debt in place, shareholders pervasively resist leverage reductions no…
Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Expensive
We examine the pervasive view that “equity is expensive,” which leads to claims that high capital requirements are costly for society and would affect credit…
Seeing Through the “Banker’s New Clothes”
Stanford GSB Authors
Additional Author
Martin Hellwig
Director of the Max Planck Institute for Research on Collective Goods, Bonn