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Federal Reserve Bank of Cleveland
Working Papers (Old Series)
Regulatory taxes, investment, and financing decision for insured banks
Anlong Li
Peter H. Ritchken
L. Sankarasubramanian
James B. Thomson
Abstract

An investigation of the effects of interest rate and credit risk on optimal capital structure and investment decisions. The authors show that with no uncertainty in interest rates, capital regulation will reduce the risk of the bank's assets, but that under interest rate uncertainty, the impact of regulation may be detrimental and raise the risk of the deposits as well as government subsidies to the bank's shareholders.


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Anlong Li & Peter H. Ritchken & L. Sankarasubramanian & James B. Thomson, Regulatory taxes, investment, and financing decision for insured banks, Federal Reserve Bank of Cleveland, Working Papers (Old Series) 9303, 1993.
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Keywords: Bank capital ; Deposit insurance
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Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

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