Abstract
The workhorse of the traditional banking literature is the model of moral hazard: As deposit rates are irresponsive to the risk-taking of banks due to the existence of deposit insurance, banks have an incentive to decrease capital-to-asset ratios and to increase asset risk, thereby increasing their probability of default and extracting wealth from the deposit insurance system.
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© 2007 Springer-Verlag Berlin Heidelberg
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(2007). The Disciplining Effect of Charter Value on Risk-Taking. In: Bank Capital and Risk-Taking. Kieler Studien, vol 337. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-48545-2_5
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DOI: https://doi.org/10.1007/978-3-540-48545-2_5
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-48544-5
Online ISBN: 978-3-540-48545-2
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