We study whether the socially optimal level of stability of the banking system can be implemented with regulatory capital requirements in a multi-period general equilibrium model of banking. We show t
Financial institutions may be vulnerable to predatory short selling. When the stock of a financial institution is shorted aggressively, leverage constraints imposed by short-term creditors can force t
On 8 December 2011, the EBA's Board of Supervisors adopted the Recommendation on the creation of temporary capital buffers to restore market confidence, stemming from the so-called "capital exercise".
